Expanding category

Aug 30, 2023

The vape market is continually expanding as more consumers seek out alternative nicotine solutions.

In the UK alone, the category is now worth around £1.2bn and is expected to reach £1.4bn in the next three years, with around 35% of current vaping volume sales taking place in the traditional retail channel (ECigIntelligence).

The growing popularity of disposable products led to a significant rise in the number of vapers in the UK in 2022, increasing from 3.7m in 2021 to 4.3m in 2022 (ECigIntelligence).

"It's clear that there will be continued demand from consumers for vaping products in 2023 and to tap into this rising trend, retailers need to ensure they are dedicating sufficient space in store for vaping products and stocking the right range for their customer base," comments Tom Gully, Head of Consumer Marketing UK&I at Imperial Tobacco.

Recent data shows that both closed pod systems and basic open pod systems remain popular choices for vapers, accounting for 17% of the UK vaping market (ITUK).

"In order to tap into this trend, we’d recommend that retailers stock a range of leading pod systems, including our newly launched blu 2.0 device," adds Gully.

There is also significant growth in the disposables category. Now worth 83% of all vape sales (ITUK), the market saw a remarkable increase from £141m in 2021 to £973m in 2022 (ITUK). In order to cater for this growing demand, Imperial has recently announced its entrance into the expanding disposables market with a new blu bar vape range.

"Retailers 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," says Gully. "With this in mind, we’d recommend stocking a range of leading disposable products, like blu bar, to take advantage of this growing demand."

The recently announced blu bar range comprises a quality collection of disposables and ready-to-use vape products with a compact pocket size design that allows for the ultimate on-the-go convenience. Each blu bar device contains 20mg/ml of nicotine in 2ml of e-liquid providing up to 600 puffs, and features a LED indicator that lights up when in use.

Available to buy at a MRRP of £5.99 per device, the new blu bar range includes six flavours, carefully chosen due to their consumer appeal, including Kiwi Passionfruit, Mango Ice, Banana Ice, Peach Ice, Watermelon Ice and Strawberry Ice. Each blu bar features bright and vibrant bursts of colour, both on the device and on the pack to create great standout on the shelf and help with range navigation in store.

"Not every customer that walks into a store is an experienced vaper, so it's important that retailers and their staff can offer a breadth of information and advice tailored to each customer that will help them to make an informed purchasing decision," suggests Gully.

"There are various ways to train staff but one particularly effective way of improving staff knowledge on vaping products is through running product demonstrations using samples of the devices being sold in store.

Allowing staff to handle the products themselves and get to know the different components using demonstration models, or sample liquids, will really help them understand more about how they work, so they can pass this information onto customers. Using similar demonstration models can also be a great way to educate customers on the devices before they buy so they leave the store fully informed on how to use a product.

"Reading up on the latest category developments and news in features such as this in the trade press is also a really great way to increase their understanding of the key trends, different terminology, and new products. There's a wealth of information at their fingertips that will go a long way to help them get to grips with the category."

Imperial continuously invests in supporting retailers so that they can make the most out of its products with sales and trends advice, promotions, store visits and in-store furniture.

As well as supporting retailers through a team of sales representatives, Imperial's Ignite app allows retailers to keep up to date with the latest news, information and training opportunities to help them perform at maximum efficiency. It includes a wide range of tools and advice, including incentive articles, downloadable POS, product information and top tips on how to increase sales in store.

Imperial is also supporting the launch of disposable vape range, blu bar, through a dedicated trade microsite www.blubarhub.co.uk, which provides retailers with everything they need to know about the range, including useful articles, video content and quizzes, as well as the chance to win prizes.

"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 and illicit or non-compliant products, impacting the opportunity for vapour products to contribute to the Government's 2030 smoke-free goals," comments Richard Cook, director of national accounts, JUUL.

"The policy landscape needs to evolve towards a more responsible framework. This is why we welcomed the new measures recently announced by the Government to combat underage use of e-cigarettes, alongside enhanced measures and funding to support enforcement of existing vaping regulations.

"It is important that the vapour industry stays focused on these new emerging issues i.e. limiting the access and appeal of its products to non-nicotine users – especially those underage."

JUUL's retailer education platform at www.juullabsretailer.co.uk provides training and support for all its partners, ensuring that they adhere to the company's mandatory policies to curb underage access to JUUL products. A continued focus on responsible marketing practices also ensures limited exposure and appeal to unintended audiences, while a commitment to sustainability has resulted in a successful trial of a take-back scheme, which JUUL hopes to roll out alongside a recycling programme for used pods and devices later this year.

E-cigarettes remain the largest and fastest growing category in reduced-risk alternatives and now accounts for over 9% of tobacco category sales, having added over £60 million to category growth over the past year. However, FMC cigarettes and RYO still account for over 65% and 22% respectively of category sales (IRI Total Market Value Sales to 26 Feb 2023).

This indicates that there is significant headroom to provide adult smokers with credible smoking alternatives like vapour products to replace combustible cigarette use.

Juul Labs has focussed its resources on the development of technologies aimed at transitioning adult smokers away from cigarettes and combating unauthorised and underage use of its products.

The new JUUL2 system was updated from previous versions with new technologies and features to provide a more enhanced vapour experience, alongside the capability to combat potentially harmful and compatible pods.

Encouraged by the number of adult smokers and vapour users who have transitioned to the JUUL2 system since launch, Juul Labs has recently introduced Blackcurrant Tobacco pods which will provide even more smokers with greater choice to help them move away from cigarettes.

"Evidence shows that flavours can play an important role in supporting adult smokers to switch, but a balanced approach is required," adds Cook. "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."

JUUL2 has a portfolio of menthol and tobacco based flavoured JUULpods, targeted at traditional adult smokers looking to transition off combustible cigarettes. The latest flavour to join the range is Blackcurrant Tobacco, which was launched nationally into stores in February, adding to the wider JUUL2pods portfolio of Virginia Tobacco, Autumn Tobacco, Crisp Menthol, Polar Menthol, Ruby Menthol and Summer Menthol.

"The recent Government announcement setting out new measures to reach its goal of becoming Smokefree by 2030 will be a key driver and indicator of potential category changes in the coming year. New policies and initiatives on reducing smoking prevalence – particularly within certain demographics – will likely support the transition of many more adult smokers from combustible tobacco products," says Cook.

In tandem, combustible cigarettes and RYO sectors may continue to see a decline in light of price increases, coupled with the continued focus on potentially less harmful alternatives like e-cigarettes.

"Ultimately, specific sub-sector developments across the reduced-risk and tobacco category will depend on actions and recommendations from the UK and devolved governments in addressing key priorities across youth usage, illicit trading and environmental impact of the sector," Cook continues.

"We await the Government's findings with interest and will continue our efforts to work with regulators, policy makers, retailers and other stakeholders, as we strive to build a more responsible and environmentally sustainable marketplace to end the era of combustible cigarettes."

Kate O’Dowd, Head of Commercial Planning at Philip Morris Limited (PML) in the UK and Ireland, comments: "Although awareness of the heat-not-burn segment remains comparatively low to that of e-cigarettes, we’re expecting more adult smokers to discover the category in 2023 – thanks to the increasing availability of heat-not-burn devices and consumables through the convenience channel."

Data from KAM on behalf of PML, found that more than half (56 per cent) of UK convenience retailers will stock heat-not-burn products to help adult smokers choose a better alternative in 2023.

Acceptance of the heat-not-burn category as a viable alternative to cigarettes, together with improved access through indirect retail channels, has broadened the appeal of IQOS – the UK's number one heat-not-burn product (Nielsen) – to adult smokers throughout the country.

For instance, in 2020, growth of the heat-not-burn category was confined largely to the southeast, with the majority (79 per cent) of IQOS kit sales – which combine HEETS variants and the IQOS device – taking place in London (PML). In 2022, 41 per cent of IQOS kit sales occurred in key cities other than of London (PML).

Furthermore, sales of IQOS kits are now weighted more evenly between the north and the south of the country. In 2020, 9 in 10 IQOS kits were purchased in the south (PML). In 2022, over a third of IQOS kits were purchased in the north of the country (PML).

"Dealing directly with legitimate manufacturers with a solid track-record in the responsible commercialisation of science-based, smoke-free products would be our advice to convenience retailers concerned at the proliferation of illegal tobacco and nicotine-containing products in the UK. This includes, but certainly isn't limited to, building strong relationships with field reps and ordering stock via a manufacturers’ trade engagement platform," comments O’Dowd.

"For us, operating in the smoke-free category is about strict adherence to all local laws when developing science-based, smoke-free alternatives that meet the highest possible standards and undergo rigorous quality-control measures to ensure compliance and consistency with every product in our expanding portfolio."

The current economic climate has greatly impacted consumer spending, with shoppers looking to offset rising costs incurred over the Christmas period, while battling against the inflationary costs of everyday goods. This tightening of purses means that existing adult smokers and adult nicotine users may look for cost-effective nicotine-containing alternatives and forgo their usual brand selection for a more affordable option.

This change in consumer spending was reflected in a recent PML-commissioned survey. When asked what adult smokers will look for when choosing a smoke-free alternative, convenience retailers prioritised price – with over half (57%) agreeing that adult customers would select the cheapest products available, followed by those products offering the best overall value for money (18%).

The survey also found that 60 per cent of convenience retailers are likely to recommend smoke-free products, such as e-cigarettes and heat-not-burn products, to adult smokers as more affordable choices in 2023. With HEETS tobacco sticks costing less than half the price of an average pack of cigarettes (ONS), IQOS – the UK's number one heat-not-burn product (Nielsen) – provides adult smokers with a better choice, at a fraction of the price of smoking.

PML recently entered the disposable e-vapour segment in the UK, with the launch of VEEBA – a premium and recyclable e-vapour product that strives for excellence in design, quality, and compliance.

VEEBA is PMI's custom-developed disposable e-vapour device, which is available in nine flavours – ranging from classic tobacco to menthol and aromatic flavours.

PML has invested USD 10.5 billion in the development of its smoke-free portfolio since 2008 and applies scientific methods, inspired by the pharmaceutical industry, to ensure that every product adheres to the highest manufacturing standards and strict quality control measures – with VEEBA no exception.

VEEBA's liquid ingredients pass rigorous scientific and quality assessments to ensure they deliver a consistent taste every time. VEEBA emits on average over 99% lower levels of harmful chemicals compared to cigarettes (importantly, VEEBA is not risk-free and provides nicotine which is addictive). These liquids are guaranteed to contain pharma-grade nicotine, with a nicotine level of 1.8% (20 mg/ml), and food-grade flavourings. Each production batch receives a Certificate of Analysis (COA) and is subject to regular, and randomised, checks to ensure devices have the correct liquid composition and nicotine content.

PMI's commitment to quality extends from the liquid used to the product build, with VEEBA's compact and ergonomic design finished in a premium soft-touch aluminum body, which is powered by a pre-charged ISO certified 280 mAh Li-ion battery.

Adrian Everett CEO, NEAFS, comments: "We are pleased to announce that NEAFS have committed over £10m towards marketing support in the UK for 2023. This investment focusses on digital billboards and social campaigns, allowing us to reach a wide audience and promote our products as a viable alternative to traditional smoking.

"We are committed to marketing our products in a responsible manner, and we understand that heated products (even NEAFS tobacco free ones) are not 100% risk-free, but that they do present harm reduction options for smokers who cannot quit. Therefore, we are committed to educating our customers about the potential risks associated with the use of our products and to promoting responsible marketing practices." The UK campaign will focus on providing accurate information about NEAFS’ products and their benefits, highlighting their potential as a harm reduction alternative for smokers.

"At NEAFS we believe that providing smokers with viable, effective alternatives to traditional smoking is an important step towards reducing the harm caused by combustible smoking," adds Everett. "We are proud to invest in a marketing campaign that will help us reach a wider audience and promote the responsible use of our tobacco free products."

With the help of NEAFS’ Countertop Display Unit (CDU), retailers are able to educate consumers about heated products and explain that switching from ‘smoking’ to ‘heating’ is a much easier and more familiar stepping stone away from combustible cigarettes than wet vape products. Many smokers find the transition from traditional cigarettes to vaping too much of a jump, but heated products bridge that gap, making for a more effective transition.

The CDU draws attention to the heated category, not just NEAFS, because NEAFS are tobacco free and regulated as Vape, which will also help retailers to drive awareness of their other heated tobacco brands. NEAFS is currently funding a £10 million outdoor digital media campaign in the U.K. to support retailers, and help grow brand awareness of NEAFS. This is the largest vaping brand digital campaign currently in the U.K., which is intended to drive sales directly to retailers who stock NEAFS. Recognising that each retailer is unique, NEAFS works closely with its trading partners to offer custom support to suit individual needs.

This can vary from leaflets and poster design to range options, staff seminars and education, brand guidance and category highlights, along with branding for online partners’ websites. Trade shows, business awards and working with the most credible industry publications and analysts also helps to underpin the credibility and integrity of NEAFS as a product and company. The company has also created a comprehensive compliance pack for our retailers, to give them the confidence and evidence that every NEAFS product they sell is legal, compliant and correctly packaged.

Ebrahim Kathrada, Managing Director of Aquavape, comments: "Keep your range up-to-date and available, it's essential to allocate the appropriate space for each brand that's selling. New flavours being introduced regularly will allow you to stay on trend and cater to your customer's preferences. Based on recent data analysis, particular flavours can boost sales and adult vapers switch brands to remain with their preferred flavour."

Aquavape offers a complete category management solution with visual planograms; it regularly reviews planograms for all of the units it provides to ensure they are up to date with all current trends.

"To prevent the sale of vapes to minors, retailers need to take proactive measures such as adopting the Challenge 25 policy," adds Kathrada. "Retailers should show their seriousness towards this responsibility and implement robust measures to stop underage vaping."

Aquavape provides a variety of attention-grabbing POS to retailers, such as in-store posters, vinyls, billboards, and custom displays for store-in-store refurbishments. The firm also conducts outdoor advertising campaigns through digital screens and promotional flags at major forecourt sites and, recently, a billboard campaign.

"Improving your sales in this category is easy – just make sure you stock the right products, display them effectively, and offer them at the right price," says Kathrada. "With consumer demand increasing each month, following these three steps can lead to up to 60% sales growth. Retailers have seen an increase in sales of up to 60% after installing Aquavape displays and POS."

Aquavape assists retailers in all merchandising aspects, including selecting the appropriate unit location and designing and installing various POS materials like outdoor billboards, indoor shelf labels, and posters. The team creates a planogram that is clear and easy to follow and has an appropriate range of products. The product range is evaluated every quarter to remove slow-selling items and introduce new products.

Peter Styles, Strategic Marketing Manager at EDGE Vaping, comments: "In 2023, we’ve seen major disruption to the disposable vaping sub-category. We expect to see continued disruption in 2023."

It's important to understand consumer goals to determine the product solution – 56% of disposable consumers want to reduce their nicotine strength.

"The pods and 10ml category has seen brands come and go, and struggling to break through because they’re competing for the same customers, and against brands that customers already love. Retailers should consider if this brand is attracting new customers," adds Styles.

"Focus any NPD launches on bringing new customers to your stores, who have a goal which your current range doesn't currently have a solution for," suggests Styles.

"EDGE believes that information is the most powerful tool for retailers in a maturing vaping market that is still rapidly evolving. This is why we focus on providing critical category insights and market data, not just to promote our own ranges, but to coach retailers on how to maximise their personal gains from the category," says Styles.

"We want to help retailers grow their whole category in the right ways to drive a secure, healthy, trustworthy, and ultimately lucrative vaping market for all to enjoy from manufacturers all the way through to consumers."

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