The UK’s vape industry has proven to be one of the greatest economic success stories of the 21st century.
A report from the Centre for Economics and Business Research found the industry’s aggregate turnover was valued at £2.8 billion in 2021 – in that same year, the sector supported almost 18,000 full-time equivalent jobs across the supply chain.
From a public health perspective, the value of the industry is immense. Not only is vaping amongst the most effective stop smoking tools available, so far helping almost 4.5 million adults in Great Britain alone move away from cigarettes or quit altogether, but it is also 95% less harmful than smoking – which claims around 80,000 lives in the UK every year.
The industry can also reduce the cost burdens of smoking on the healthcare system. Research conducted by Brunel University found that the NHS could save more than half a billion pounds per year if just half of England’s adult smokers made the switch.
“The Government, by its own admission, does not know how many vapers will return to smoking after the introduction of a disposable ban because it was ‘difficult to quantify’, however, research from University College London found such a move could impact 1.2 million current smokers and almost 750,000 former smokers who may be at risk of relapse,” comments John Dunne, Director General of the UK Vaping Industry Association (UKVIA).
Experts have also warned that the disposable ban will trigger a massive increase in the sale of illicit products and put huge additional pressures on Trading Standards, who have long been calling for more resources and support. Polling commissioned by the Association of Convenience Stores suggests the ban will result in a £645m boost to the black market.
“Action must be taken to cut underage and illicit vape sales off at the source, but this needs to be achieved through effective and proactive enforcement of the law – something that we are just not seeing,” adds Dunne. “To this end, the industry has developed a licensing scheme which would empower Trading Standards to crack down on rogue traders and raise upwards of £50m per year in annual self-sustaining funding.”
The critical role of vape flavours in helping adult smokers quit and stay off cigarettes cannot be overstated. The latest data from Action on Smoking and Health UK reveals that fruit options are the most popular amongst adult vapers in Great Britain, while just 1.4% say they use products with ‘no flavour’.
This was echoed by UKVIA-commissioned research which looked at sales figures from four of the biggest online retailers in the country. This study reaffirmed that fruit flavours are the most popular amongst middle-aged users, followed by ‘Treats and Desserts’.
“The UKVIA has been advocating for balanced restrictions around product names and descriptors for years to ensure they are not disproportionately youth-appealing, but the government must tread carefully when it comes to legislation around flavours. Consumer polling by leading retailer Evapo recently found as many as two thirds of ex-smokers will return to tobacco if the Government restricts vape flavours,” says Dunne.
“It is critical that every business and professional across the vape supply chain, whether retailer, manufacturer, distributor or wholesaler, is meeting responsibilities around youth access prevention, product standards and environmental obligations,” Dunne continues.
“Further, if you are aware of a business which is flouting the rules, you must report them to the relevant authorities or through the UKVIA’s Be Vape Vigilant campaign – staying silent and protecting rogue traders will only hurt the legitimate industry and put consumers at risk.
“As a sector, we must make clear that the vape industry is not the enemy but rather the illegal sellers and unscrupulous businesses who are selling to minors or stocking illegal products.”
Yawer Rasool, Consumer Marketing Director UK & Ireland at Imperial Brands, comments: “As more consumers seek out alternative nicotine solutions, the vaping sector is expected to grow from 36% in 2019 to over 45% by the end of 2024 for adult nicotine users (ECigIntelligence). In the UK alone, the category value is forecast to almost triple from £930 million in 2019 to be worth almost £3 billion in 2025 (ITUK estimates).
“With around 35% of current vape volume sales already taking place in the traditional retail channel (ECigIntelligence), it’s clear that there will be continued demand from consumers for vaping products throughout 2024. To tap into this rising trend, wholesalers need to ensure they are dedicating sufficient space for vaping products and stocking the right range for their customer base.”
There is currently significant growth in the disposables category. Now accounting for an impressive 88% of all vape sales (ITUK estimates), the disposables market saw a remarkable increase from £141m in 2021 to £973m in 2022 (ITUK).
“Data also shows that both closed pod systems and open systems remain popular choices for vapers, accounting for 17% of the UK vaping market (ITUK). To tap into this trend, we’d recommend that wholesalers stock a range of leading pod systems, including our blu 2.0 device,” adds Rasool.
“Wholesalers should ensure they review their range regularly and prioritise stocking the brands that cater to these fast-moving trends in order to remain current and maximise sales. With this in mind, we’d recommend stocking a range of leading disposable products like blu bar 1000, and pod-mods such as blu 2.0, to take advantage of the growing demand.”
With continued consumer demand for disposable vapes, ITUK recently launched a new and improved blu bar 1000 device to help wholesalers tap into the continued consumer demand. blu bar 1000 benefits from an array of product upgrades and new features, providing the perfect solution to help wholesalers grow their vape sales even further in 2024.
Available with an RRP of £5.99, the fully compliant blu bar 1000 range offers up to 1,000 puffs per device and features blu Flavour Tech mesh coil technology to deliver strong bursts of flavour that really lasts. The redesigned casing on blu bar 1000 also means that the liquid level is visible through the translucent mouthpiece, making it much easier to see when the liquid is running low.
With a new removable battery, users can now twist, pop and release it, making it easy to safely dispose of the used battery at a local battery collection point. While a new security lock feature allows users to lock their blu bar 1000 device when not in use. blu bar 1000 has initially launched in eight flavours, including Blueberry Ice, Strawberry Ice, Watermelon Ice, Banana Ice, Mint, Grape, Tropical Mix and Blueberry Cherry.
“While the disposable vapes ban announcement may have brought concern for many retailers and wholesalers, it’s important to note that if the draft regulations pass through parliament, the ban is not set to come into force until 1st April 2025, which means that it’s business as usual for now,” says Rasool.
“Despite the announcement, it’s unlikely that the demand for disposable vapes will slow down any time soon, so we recommend that wholesalers continue to stock a wide range of leading disposables, like our new blu bar 1000, in order to cater to this trend and in turn, maximise sales.”
When it comes to flavours, fruity flavour profiles are the most popular among adult vapers, with recent data showing that Watermelon, Strawberry, Berry Lemonade and Blueberry Sour Razz are now the top-selling vape flavours (ITUK). The new blu bar 1000 features three of these top four flavours in the market.
“No two depots are the same so it’s important for wholesalers to take time to consider what customers are buying most frequently, or not buying at all, and then adapting the range accordingly. Ultimately, we’d recommend stocking as broad a range as space allows and then fine tuning this in the weeks and months that follow according to customer feedback and sales. The wholesalers who can remain agile, will be in the best position to cater for their customers and grow their vape sales as a result,” suggests Rasool.
“There is a huge variety of different products available on the market today, so 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 insights into the latest trends shaping the category.
“By being informed about the 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.”
ITUK works closely with its wholesale customers through a range of tactics, including promotions, to help them maximise their nicotine sales and ensure they are offering the right products to cater for their retail customers.
Gleb Pugacev, UK Managing Director at Scandinavian Tobacco Group UK (STG UK), comments: “Nicotine pouch sales are really gathering pace in the UK and flavours are driving that growth. In fact, in 2023, UK pouch sales accounted for a 10% share of global pouch revenue. We recognise these pouches represent a great opportunity to support tobacco harm reduction in adult smokers.”
STG has announced its entry into the next gen nicotine category with the launch of XQS pouches. This new range has been created in Sweden, the home of nicotine pouches, and has been available to wholesalers and retailers from May onwards, competitively priced at just £5.50.
XQS has launched in four flavours with a variety of strengths: Tropical, Blueberry Mint, Cool Ice and Arctic Freeze. While the Tropical and Blueberry Mint variants give users a fruity burst of flavour, the Cool Ice and Arctic Freeze variants offer minty flavour and an icy, cooling sensation. All four variants come in fully recyclable packaging and contain uniquely smaller sized pouches to ensure a perfect fit under the lip.
The UK launch of XQS will be supported with a large consumer and trade marketing plan, as well as dedicated stands at a range of trade shows. STG will also be supporting retailers with a range of XQS point of sale material including large or small stockable units, trial encouraging clip strips or visibility units. The consumer focus for XQS will be via social media where the brand will be across all major channels, and there will also be a host of consumer-based activities throughout the Summer, where it will be present in major cities and festivals.
The Heated Tobacco category was worth £120 million in the last year in Traditional Retail (Circana), with growth of 8.9% YoY (Circana).
Evo is the fastest growing heated tobacco brand (Circana).
The nicotine pouch category in the UK is growing and is now worth £8.1 million a month (Circana). This would equate to an annual figure of approx. £96.7 million a year (Circana).
Currently, 45.5% of nicotine pouch sales in the UK come through the convenience and independent channel (Circana).
The nicotine pouch category in the UK is growing and is now worth £8.1 million a month (Circana). This would equate to an annual figure of approximately £96.7 million a year (Circana).
67.1% of Nicotine Pouch sales in traditional retail in the UK are from the Extra Strong or Strong strengths (Circana).
Nordic Spirit currently has 57.3% market share in the Convenience and Independents Channel (Circana).
Mark McGuinness, Marketing Director at JTI UK, comments: “We understand that the alternative nicotine product categories are growing, and customers are looking for other alternatives that can be used instead of, or alongside their traditional tobacco products. That’s why we’ve continued to invest in Nicotine Pouches with our Nordic Spirit product, and Ploom X Advanced in Heated Tobacco, as each category continues to evolve and grow in popularity.”
More customers are looking for an alternative but familiar tobacco experience with devices that heat tobacco instead of burning it. The category is currently worth £120 million in traditional retail (Circana).
“With JTI estimating the category to be worth £400 million by 2027 (Circana), there’s no doubt that Heated Tobacco provides a big opportunity for wholesalers, especially those with strong product knowledge,” adds McGuinness. “Ploom has gone from strength to strength over the past few years, and device sales have almost doubled compared to last year, whilst EVO tobacco stick sales have tripled year on year (JTI).”
In September last year, JTI launched Ploom X Advanced, an updated version of the Ploom X device originally released in October 2022. The device includes two key improved features; an optimised HeatFlow™ system, with higher vapour volume during initial puffs offering an enhanced user experience, and faster charging, now taking less than 90 minutes to achieve a full charge.
“Just five months after the launch, we were thrilled that Ploom X Advanced came out on top in the Product of the Year Awards 2024 in the Heated Tobacco Category. With 86% of shoppers more likely to buy a product that has won stocking Product of the Year winners can act as a sales booster for retailers,” says McGuinness.
“The cost-of-living crisis is fuelling the growth in lower-priced nicotine alternatives, and almost 60% of Heated Tobacco consumers are switching from value and below tobacco lines (KMG). The competitively priced Ploom X Advanced bundle offers value for money within the Heated Tobacco category.”
The nicotine pouch category continues to grow, now worth approximately £96.7 million a year (Circana). Nordic Spirit is one of the leading nicotine pouch brands in the UK (Circana) and continues to remain in growth (Circana), making it a must-stock for wholesalers looking to capitalise on the category.
A key trend within the nicotine pouch category is the continued demand for higher nicotine strengths. With a total of 66.6% of nicotine pouch sales in traditional retail in the UK from the Extra-Strong or Strong strengths (Circana), JTI has continued to expand its portfolio to help wholesalers tap into these trends.
Mint-flavoured products have soared to new heights within the category, with the market currently split 80.7% mint and 18.7% fruit (Circana).
Flavours are also helping to drive the Heated Tobacco sector forward. Sales of tobacco-flavoured variants account for 50% of all refill sales in traditional retail (Circana), with Menthol flavoured accounting for 40% (Circana). EVO is crafted using only the finest quality tobacco, to create a premium blend for a richer, smoother, authentic tobacco taste that is specifically formulated for heating. In 2023 JTI improved its existing tobacco flavours, Bronze and Amber to enhance the consumer experience, alongside launching two new tobacco variants, Gold and Tan.
John Rennie, Director of Commercial Operations at Philip Morris Limited (PML) in the UK and Ireland, comments with regards to the impending ban on disposables: “Retailers must grasp the significance of this pivotal moment and adjust their strategies accordingly. By incorporating innovative products like IQOS ILUMA and TEREA tobacco sticks into their offerings, they not only navigate these shifts, but also thrive in the emerging smoke-free era.”
In the UK, 73% of adult smokers have tried vaping, but only 23% have stuck with it (Ash). Recognising that no single smoke-free product can cater to every smoker’s preference, embracing a multi-category approach becomes indispensable for those investing in their smoke-free portfolio.
“The UK is at a pivotal moment in its journey towards a smoke-free future; a downward trend in demand for combustible tobacco indicates a steady, but continuing decline in smoking itself,” adds Rennie.
“Over several years, cigarette sales have fallen in the convenience trade and in the grocery multiples, demonstrating that more smokers are abandoning cigarettes, which is always the best choice, or switching to smoke-free alternatives.”
At Philip Morris International (PMI), the parent company of brands such as Marlboro and IQOS – the world’s number one heated tobacco product (PMI estimate) – this shift has been reflected by a significant milestone. During PMI’s end-of-year 2023 financial results, the company’s CEO revealed that IQOS had surpassed Marlboro in global net revenues, becoming the company’s number one international nicotine brand (PMI).
“This may sound like self-interest; a moment for us on our own journey to becoming smoke-free, but this announcement marks a turning point that anyone listing tobacco and nicotine products should acknowledge and respond to,” says Rennie.
PMI estimates that approximately 20.8 million adults around the world had already switched to IQOS and stopped smoking. Smoke-free products accounted for approximately 37% of PMI’s total full-year 2023 net revenues.
Philip Morris’ current product portfolio primarily consists of cigarettes and smoke-free products. Since 2008, PMI has invested $12.5 billion to develop, scientifically substantiate and commercialise innovative smoke-free products for adults who would otherwise continue to smoke, with the goal of completely ending the sale of cigarettes.
IQOS ILUMA’s innovative bladeless technology offers adult smokers and adult nicotine users an affordable, all-in-one tobacco experience without any smoke or ash, and less smell than cigarettes for a seamless and cleaner experience. The range of TEREA tobacco sticks include nine tastes, from classic or menthol tobacco to aromatic blends.
“IQOS ILUMA complements gantries because it offers a real tobacco taste and satisfaction, with 95% less harmful chemicals compared to cigarettes and enables savings of up to £3,000 a year,” continues Rennie. “It’s these attributes, coupled with evolving preferences among adult smokers and nicotine users, which have elevated IQOS beyond Marlboro.”
Marlboro was first registered as a trademark in 1908 and by 1972, had become the world’s best-selling cigarette. Marlboro has since maintained its position, owing to impressive sales performance, global availability, and strong brand recognition.
While it took Marlboro 115 years to establish its dominance, IQOS has surpassed the world’s most valuable cigarette brand in less than a decade since its launch. In the UK, as with many other markets, the growth of heated tobacco has been a sharp contrast to the decline in cigarette sales.
Nationally, the percentage of convenience retailers now selling TEREA and HEETS tobacco sticks has risen by 42% in two years (Nielsen), while cigarette sales declined by 34% during the same period (Nielsen).
This trend is also reflected in grocery multiples, where sales of IQOS kits grew by 269% between September 2021 and December 2023 (Nielsen), while cigarette sales declined by 27% (Nielsen).
“The demand for heated tobacco products will continue to grow as more adult smokers seek better alternatives, but the impact will not be limited to combustible tobacco products alone,” adds Rennie.
Globally, total IQOS users at year-end (2023) estimated at approximately 28.6 million (up by 3.7 million versus December 2022), 73% of which (approximately 20.8 million) had switched to IQOS and stopped smoking.
Philip Morris Limited (PML) has unveiled HEATWAVE OPEN, a cutting-edge Digital Trade Engagement Platform designed to bolster online support for convenience retailers stocking IQOS, the world’s number one heated tobacco device (PMI estimates).
Exclusively available to retailers enrolled in PML’s HEATWAVE OPEN programme, the platform serves as the sole channel for retailers to order IQOS ILUMA, the latest advancement in tobacco heating technology introduced in the UK last year. Retailers can also procure TEREA – the tobacco sticks used exclusively with the IQOS ILUMA device – alongside PML’s broader range of smoke-free products.
HEATWAVE OPEN provides a range of support services, educational tools, and reward schemes to help retailers get the most out of stocking PMI’s smoke-free portfolio. Enhancements include a gamification feature to drive engagement, offering instant rewards upon completion of various activities such as participating in the Watch & Win campaign and completing quizzes and tasks through the Level Up challenge.
Moreover, the platform offers dynamic peer-to-peer guidance through the ‘IQOS ICONS’ section, featuring brief, informative videos from standout IQOS sales achievers. These videos provide valuable insights into product information, sales strategies, and the advantages of stocking IQOS ILUMA and TEREA.
In a bid to enhance user experience, the platform interface has undergone a significant transformation, incorporating video content for a more dynamic interaction.
Anis Safri, Sales Director, IVG, comments: “There is a growing trend for alternative nicotine delivery systems, such as pod systems and nicotine salts, catering to consumers seeking smoother vaping experiences and higher nicotine concentrations to facilitate the switch from smoking.
“There is a notable shift towards customisation and personalisation within the vaping community, with an increased emphasis on customisable devices, flavours, and vaping styles to suit individual consumer preferences.”
The industry is witnessing a surge in interest in legal BIG PUFF devices such as IVG 2400 4in1 which is the first to market. Such devices give consumers a longer vaping experience and flavour variations within one device, without the hefty price tag.
“The immediate effect of the ban on disposable vapes will be a shift in range and choice for the consumer,” adds Safri. “Retailers may also have concerns about overstocking and not having long enough to transition, however, IVG are ahead of the curve with creating new products, giving retailers enough time to stock products incrementally for early adopters to start picking up the new devices. Another concern may be whether former vaping consumers will easily make the switch to compliant products, we plan to combat this by designing products to be as convenient as possible for the end user.”
Once the ban timeline is clarified and any other changes in regulations defined, shelf facings will be taken over by new product lines that are optimised to the new regulations, which is currently predicted to be rechargeable and reusable pod devices. Outlets will be relying on the manufacturing and key brand’s supply chains, to have exciting and compliant products to replace disposables. Retailers will also need supporting educational POS to communicate with former disposable consumers on the benefits of pod device vaping, so that there is not a drop off in revenue.
“If the Government allows for a phased and sensible transitioning timeline, the switch can be well managed,” says Safri. “Failure to manage the transition efficiently could result in overstocks and huge discounting of disposables which will potentially exacerbate the underage disposable vaping issue.”
Some of the flavours gaining popularity in the Next Generation category include refreshing fruit blends like mango pineapple, tangy citrus mixes such as lemon and lime, raspberry and indulgent dessert-inspired options like creamy vanilla custard and coffee. Additionally, exotic combinations like lychee ice and tropical fruit medleys are capturing the interest of vapers.
Amongst IVG’s top sellers are the award-winning IVG2400 4in1 devices which are one of a kind and the first to market. The IVG2400 device is the first legal TPD-compliant big puff device in the UK. Additionally, the company’s selection of high-quality e-liquids, include flavours such as refreshing fruity blends, menthol sensations, and the classic tobacco varieties prove extremely popular amongst vapers.
Following on from the success of the launch of the award-winning IVG2400 4in1 device, IVG has recently released 10 brand new editions. Other recent introductions include exciting new e-liquid flavours inspired by the latest taste trends and consumer preferences.
Richard Cook, Director of National Accounts, Juul Labs UK, comments: “In total the smoking alternatives sector is worth £2.1bn – growing at 44.8% (latest 4-week growth has stalled and is only c. 5% and in a few months will probably be in decline) per year. The convenience channel accounts for 57.6% of this, coming in at £1.2bn. This is in contrast to the tobacco category which has seen factory-made cigarettes fall 3.2% in value and 14.1% in volumes.”
Sales of closed-pod systems and open systems remain flat overall. E-cigarettes remain the largest category, however Nicotine Pouches are now the fastest growing category in smoking alternatives. However, FMC cigarettes and RYO still account for over 60% and 21% respectively of category sales (Source Circana Total Market & Symbols & Independent Value & Unit Sales MAT to 21st Apr 2024). This indicates that there is significant headroom to provide adult smokers with credible smoking alternatives like vapour products to replace combustible cigarette use.
Over the past three years the main growth area has been the single use, disposable sector which accounts for over four fifths of the category. However, within the Tobacco and Vape Bill, as well as placing a gradual age limit on purchasing tobacco, there is also provision for banning all single use disposable vaping products.
“Retailers should be reviewing their category in light of the impending ban – due for implementation on 1st April next year – to ensure that current and future adult consumers of vaping products have access to a wide range of alternatives and responsible flavour variants to help them stay on their smokefree journey and prevent them reverting back to cigarettes,” adds Cook.
To date, the UK has taken an evidence-based approach that recognises the significant harm reduction potential in encouraging adult smokers to switch to alternatives like e-cigarettes, and in so doing, reduce the death and disease associated with tobacco use. This approach is, however, undermined by the risk of underage use, illicit or non-compliant products, youth use and the unsustainability of single use disposable products, which are often improperly disposed of with Material Focus finding that five million are thrown away every week.
“Although the government is still committed to vaping as a tobacco harm reduction tool and a major force in helping adult smokers transition away from more harmful tobacco products, the Tobacco and Vape Bill will fundamentally change the category and how it could look on shelf and in store,” says Cook.
“There are expected to be flavour and packaging restrictions as well as how products could be displayed in store. We will have to wait and see the full extent of how future legislation will impact the category but care has to be taken to ensure that vapour products – which is one of the most effective routes for smokers looking to move away from cigarettes – remain a credible option for adult smokers and help contribute to the Government’s 2030 smoke-free goal.”
Sweet and fruits flavours are the most common flavour profiles among vape users with the more traditional flavours of tobacco and menthol accounting for 13% of the category.
Juul Labs’ portfolio of JUUL2pods include responsibly named profiles within tobacco and menthol profiles.
JUUL2 has a portfolio of menthol and tobacco based flavoured JUULpods, targeted at traditional adult smokers looking to transition off combustible cigarettes. All JUUL2pods have a tobacco or menthol base overlaid with complex flavour profiles to ensure that they appeal to a wide range of smokers looking to switch. In terms of sales, Crisp Menthol is the best-selling JUUL2pods sku followed by Virginia Tobacco. However, the other flavours in the JUUL2 portfolio – Autumn Tobacco, Polar Menthol, Ruby Menthol and Summer Menthol – are all performing well.
JUUL2 is the number one growth driver within the closed systems category (Circana Total Market Value Sales MAT to 21st Apr 2024 vs YA) with 89.3% share of Menthol and 44.5% share of tobacco (Circana Total Market Value Sales L4wks to 21st Apr 2024).
“It is critical that wholesalers, as the main suppliers to the convenience channel, offer retailers the best – and latest advice – to help their customers navigate through the smoking alternatives category and pivot from a category which is currently dominated by single-use disposables to a category which offers a comprehensive range covering closed pod and open systems as well as heated tobacco and oral nicotine,” suggests Cook. “Wholesalers also have to ensure that the products they offer meet current regulations and should therefore be conducting due diligence on products stocked to ensure that they are supplying legally compliant and responsible products to their customers.”
Evidence shows that flavours can play an important role in supporting adult smokers to switch, but a balanced approach is required. The vaping sector has seen a proliferation of new flavours entering the market, which in some instances has raised concerns over naming convention and profiles that could potentially appeal to underage audiences. It is important that there’s a continued focus and review of flavour portfolios to prevent child-friendly profiles and characteristics that could drive appeal and further uptake by underage audiences.
JUUL’s retailer education platform at www.juullabsretailer.co.uk provides training and support for all the company’s partners, ensuring that they adhere to the company’s mandatory policies to curb underage access to JUUL products. Adhering to Challenge 25 is compulsory for all retailers selling JUUL products and the company’s continued focus on responsible marketing practices also ensures limited exposure and appeal to unintended audiences, while a commitment to sustainability has resulted in the launch of a pod recycling programme.
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