Tobacco smoking may still dominate the UK smoking scene but judged by vaping’s meteoric growth it looks like tobacco could lose its crown within the next decade. Currently worth £1.4bn, against about £11bn for tobacco smoking, there are now 3.6m UK vapers, delivering an increase of 2.5% on last year’s spending, or an average of £38 per month spent on vape products. NextGEN360, producers of its flagship brand Edge, confidently expect the market to be worth over £2bn by 2020. Yet another prediction from Liberty Flights thinks sales could hit £4.46bn by 2021.
The reasons for the shift away from traditional tobacco into the ever-evolving vaping category may be obvious enough but they bear repeating. These primarily include the rising costs of tobacco and health implications. Consumer perception is in line with medical experts in the fact that vaping is estimated to be 95% safer than smoking, further enforced by charities such as Cancer Research which would much prefer to see smokers switch to vaping if they feel unable to give up smoking altogether. Not all vaping products, incidentally, contain nicotine. But are there opportunities the distribution channels are missing and if so what is the industry doing to help?
Follow the trends
One lesson retailers and wholesalers must learn is that strong habitual sales patterns have emerged and that the growing market continues to diversify. The stronger trends are still towards the convenience-oriented buying of ‘standard’ 10ml 50-50 liquids. In Edge’s experience there is a strong trend for the sales to be focussed on the 18mg-6mg strengths, suggesting a user preference for both the upper and lower nicotine strengths; with comparatively lower sales of intermediate strengths, about 12mg. Edge has also observed a sales trend towards e-liquids with fruit flavours, and even more so with menthol-based profiles, with tobacco sales sitting on the cusp of its top 10 best-selling flavours. Alas, one could say, Edge’s strongest performers are low strength (6mg) menthol-flavoured 10ml e-liquids, selling almost double the volume of the next leading SKU. The reason for alas is the upcoming menthol tobacco ban and “click” production in May 2020, affecting 20-25% of adult UK smokers who use these products.
Clearly, says Edge, the ideal situation for such smokers would be to quit tobacco use entirely but for those who choose to switch to alternatives in the e-cigarette and vaping category they may be interested in some of the other options, including mint-flavoured products.
Despite any disappointment over the menthol ban, Edge plans a major drive in its latest product range, Edge Base, as well as a newly developed vaping device, the Edge PRO, comprising eight high volume, short-fill format e-liquids designed specifically for sub-ohm vaping. The flavours are a balanced range of fruit and dessert profiles formulated to deliver maximum flavour and vapour production, even with the addition of nicotine shots by the consumer. The Edge PRO presents a combination of several features designed to resolve the most common bugbears of typical vaping devices brought together in one package.
How to maximise wholesaler sales
Although continuing to adapt within the vaping category, the wholesale market includes vaping in the tobacco category in most wholesaler accounts. Owing, however, to market growth this should be treated as its own category and space is the major issue. The leading brand across most wholesale accounts is Edge and is the number one brand in the Convenience and Symbol channel yet in most depots the space attributed to the brand is minimal in comparison with lower performing SKUs. In view of the looming menthol capsule cigarette ban, wholesale accounts should be looking to increase space dedicated to vaping.
JUUL is an electronic nicotine delivery system that has helped wean millions of smokers off tobacco with its technically advanced product portfolio. Its mission is improving the lives of one billion adult smokers by eliminating tobacco cigarettes. Aware it needs to scale up its business, it is now in 20 countries and in 1,600 vape stores in the UK alone, taking around 10% of the UK vaping market, making it the UK’s number one closed vaping brand. The closed system sector (pod and capsule) is driving over 85% of growth in the sector, with value sales up over 250% over the past year. Multiples are leading the way in closed pod systems which are now outstripping open sales in that channel but there is still a lot that needs to be done, says JUUL’s MD, Dan Thomson.
There is a perceived problem with youth vaping but as Mr Thomson explains JUUL is actively encouraging age verification for products in stores. “We not only encourage it, we make it mandatory. Each JUUL stockist must sign up to Challenge 25 and be prepared to be mystery-shopped, otherwise products will not be supplied to the store,” he says. This makes eminent sense, given that President Trump has said that his administration would propose to the FDA a ban on all flavoured electronic cigarettes amid concerns about underage vaping. Although there is some controversy in America over vaping it should lead to a better and stronger regulatory environment.
Education is key
While statistics prove that there is a move away from cigarettes towards the popular alternative of vaping, says Vape Dinner Lady’s John Taylor, moving from smoking to vaping can involve a steep learning curve for many smokers at first – so it is key that ease of product use is communicated to the retailer. “The biggest challenge for Vape Dinner Lady is ensuring that education about vaping use is both effective and accurate.”
Duncan Cunningham, UK corporate affairs director of Imperial Tobacco and Blu UK, echoes Vape Dinner Lady’s stress on education. 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 them on their category. With a dizzying number of different devices and liquids available, many retailers may understandably be intimidated by the sheer breadth of the vape offering. These retailers need knowledgeable advice on what to buy and reassurance on product quality. “It is vital that depot staff understand what products they are selling and also the end customers to whom they are selling,” advises Mr Cunningham.