Vaping: the forgotten £1bn category?

vype device

The vaping category has yet to fulfil the promise it showed just a few short years ago, but as a £1bn category in the UK, it arguably still doesn’t receive the attention it merits from local retailers.

Wind back just a few years and vaping was all set to be The Next Big Thing. The category was in stellar growth and the noise around it was deafening. The arrival of US giant JUUL into the UK market saw media frenzy reach fever pitch and local retailers across the country got busy refitting their stores to add shiny new vaping fixtures.

Fast forward to today and the category has slipped from the limelight and sales growth has declined. The menthol ban did spark some improvement, but not the explosion many predicted. Most of the key players have retrenched and the wave of NPD and new entrants seen in the first few years is now barely a ripple. So, what’s gone wrong with vaping?

“The vape category is currently worth around £1bn in the UK [ECigIntelligence, Jul 2020]”, says Duncan Cunningham, UK Corporate Affairs Director at Imperial Tobacco & blu. Remarkably, only around 30% of that £1bn goes through traditional retail outlets, the rest going through online and specialist vapeshops. With so many similarities between the traditional tobacco category and the vaping category, it seems clear that independent retailers have missed an opportunity here – but could the pandemic have a positive impact on vaping sales through local retailing?

“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 convenience store sales in the vaping category,” says Cunningham.

“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, making up 81% of the market the introduction of pod-mod devices in recent years has seen closed systems continue to trend upwards, regaining its share of the category back towards 20% [ECigIntelligence, Jul 2020].”

For many vapers, pod-mods represent the closest experience to traditional cigarettes while, for retailers, the transaction is familiar. Consumers simply purchase new pods as they need them. Clean, simple and convenient.

JTI’s Gemma Bateson, Head of Reduced Risk Products, agrees that pod-mods are where local retailers should be focusing their attentions. “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 [IRI, March 2021],” she says.

“Last year in traditional retail, according to the same data, the vaping category was worth £307m, with growth of 21.6% YoY, making it a key profit driver.”

Bateson also points out that, of that £307m, JTI’s Logic brand accounted for £37m of sales, with growth of 27.9% YoY.

“Our premium pod device, Logic Compact, offers a modern and convenient alternative to traditional vaping products,” she says. “Assembly couldn’t be easier, with pre-filled e-liquid pods that click magnetically into place, making it easy to experiment and switch between different flavours and strengths.

“Vapers are looking for convenient and easy-to-use devices that allow them to experiment with various strengths and flavours to find the right fit.”

Key to finding the right strength and fit over the last year or two has been the growth in nicotine salts – nicsalts – which have grown to become the preferred liquid for pods. Nicsalts result in nicotine being absorbed into the body faster than normal e-liquids, more closely replicating 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,” says blu’s Cunningham.

The range of myblu Intense Liquidpods features nicsalts and is available in a number of flavours in 1.6% nicotine strengths. For vapers keen to try different tastes, the range includes everything from Golden Tobacco and Menthol to Blueberry and Strawberry Mint.

“The myblu device combines the performance demanded by experienced vapers with the ease-of-use appreciated by new entrants to the category,” says Cunningham. “The device’s hassle free Liquidpods allow vapers to switch between flavours in seconds via a simple one-step ‘click and go’ system.”

JTI also offers a range of nicsalt products in a range of flavours, as Bateson explains: “Last year, Logic Compact Intense, a range of refill flavour pods with nicotine salts, were introduced to offer a smoother and more intense flavour delivery. The range includes menthol flavours such as Peppermint, Polar Menthol and Berry Mint. The pods are compatible with the popular Logic Compact device.”

The company also expanded its Logic EPIQ range last 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 an enhanced vaping experience at a value price.

Bateson believes that the pandemic offers fresh opportunities to local retailers to grow sales in the category. “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,” she says. “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.”

Consequently, customer service has a particularly crucial role to play at present, given the in-store restrictions in place. Many consumers won’t wish to handle products 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, retailers need to be prepared to proactively offer them advice at the till point and help shoppers feel at ease by providing knowledgeable answers to their questions that really showcase their understanding of the category.

“Now more than ever, investing in education is key to retaining new and existing vape customers,” concludes Bateson. “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 shoppers and are equipped to answer any questions they may have, this will pay off massively in terms of sales and repeat visits.”