The e-cigarettes market value has almost doubled over the last two years with one million existing adult smokers now using them, and the retail sales value of e-cigarettes in the UK was £126.7m last year, making the category an emerging profit opportunity for retailers.
by Mia Hunt
The Scottish Health Survey for 2014, published last month, found that one in 20 adults in Scotland use e-cigarettes and a sixth of adults have tried them, and by all accounts the e-cigarette trend is set to continue.
But while it is developing at an extraordinary pace, much remains unknown about the category. There is widespread agreement that e-cigarettes present much less risk for users than traditional combustible tobacco products, and some can be used as quitting aids, but there are still questions about the potential health risks.
As such regulations are due to come into force across Europe that will mean that while e-cigarettes will continue to be regulated as consumer products, there will be a range of additional safeguards for consumers including the requirement for a health warning on packaging, and restrictions on advertising and promotion.
The Scottish Government remains open-minded on the potential benefits of e-cigarettes to current smokers but it aims to ensure that they are regulated in a way which limits their attractiveness and accessibility to non-smokers, and in particular, to young people. As such, it is proposing that it be an offence to sell an e-cigarette to a anyone under the age of 18, with any retailer found to do so liable on summary conviction to a fine equal to that of the illegal sale of tobacco products.
“From October you can no longer sell to under 18s, and we’d urge all retailers to use Challenge 25 just like they do with alcohol and tobacco,” advises Jeremy Blackburn, Head of Communications at JTI, which owns the E-Lites brand. “All the same advice retailers have been given on age-restricted sales, they should implement when selling e-cigarettes.”
But while JTI welcomes regulation, Blackburn is concerned about the effect of excessive legislation: “With more and more people using e-cigarettes we want to make sure they are properly regulated. JTI supports proportionate regulation but we don’t want to see e-cigarettes over regulated.”
Despite the lack of knowledge around the safety of e-cigarettes and the impact of upcoming regulation, they remain an important and growing category for convenience retailers.
And with almost 30% of consumers saying they would choose to shop elsewhere if their first choice e-cigarette brand wasn’t available in-store, stocking the right brand is key to driving sales.
Jennifer Roberts, Category & Shopper Marketing Controller at blu (UK), advises stocking two to three of the top five brands – E-Lites, Nicolites, blu, Vivid and MV – and a variety of products covering all vaping needs, both disposable and rechargeable e-cigarettes for new users along with cartridges, and vaporizers and e-liquids for experienced vapers.
“Social smokers trying e-cigarettes for the first time will often opt for disposables,” explains Roberts. “They don’t have to charge batteries or change e-liquids but can enjoy them, for the equivalent of up to 30 cigarettes, and discard when done. Regular and more experienced vapers usually favour refillable, rechargeable vaporisers, and e-liquid formats that are the fastest growing due to the value savings, greater range of flavours and increased product performance.”
As Blackburn points out, rechargeables are leading the category with 58% Share of Value (SOV), while tanks are becoming increasingly popular, now accounting for 27% SOV. Over half of users buy at least four refills every month and 36% of customers purchase them more than once a week.
E-liquids are widely recognised as the most buoyant area of the e-cigarette market with approximately 66% of current users preferring to use a refillable device.