The UK vaping market is worth over £1bn with traditional retail channels accounting for almost £160m – yet value sales within these channels appear to be stalling as consumers gain confidence in the category and purchase via alternate channels like vape stores and online.
The vaping category has long been accepted as a massive opportunity for local retailers, capable of delivering high footfall levels as well as remarkable profit margins. It has also long been felt that convenience retailing is the ‘natural home’ for vaping products with customers seeking quick, convenient transactions, just as tobacco consumers have done for many years.
The UK vaping market is now estimated be worth around £1bn with something approaching £160m [Nielsen, Oct 2017] of that coming through traditional retail outlets. The remainder is mopped up by specialist vaping outlets and online sales. With most local retailers now offering at least some sort of vaping offer, the industry had expected the percentage of sales through traditional retailing to continue increasing – but worryingly that now appears not to be case.
Sophie Hogg, Head of Next Generation Products, at Imperial Tobacco UK (ITUK), explains: value sales within traditional retail channels appear to be stalling as consumers gain confidence in the category and purchase via alternate channels like vape stores and online.”
This is a worrying development and one that local retailers must address if they are to truly exploit what remains a fast-growing opportunity. Hogg recommends that retailers act fast and use the expertise and experience of companies like ITUK to secure their share of the market. She says: “blu is committed to offering continued best-in-class support to independent retailers around the evolution of the fast-moving vaping category. We have already distributed a number of e-vapour guides across the independent trade, including advice on key market trends, the range of systems available, and changes in government legislation. In terms of in-store activations, we also offer a wide range of POS materials from shelf edge strips and selling units to in-store sampling stations. Retailers wishing to take advantage of these opportunities should speak to their Imperial representative.”
Hogg advises that behind-the-counter solutions still have an important role to play in the sale of tobacco, accessories and – moving forwards – e-vapour products. They clearly, legally signpost that tobacco and e-vapour products are for sale, showcase the retailer’s wide range and availability of products, offer secure storage and – in the case of Imperial-supplied gantries – are provided and installed free-of-charge.
blu says that there are three million vapers in the UK, 40% of which have started using vaping products in the last six months. 90% of users vape regularly, with 50% vaping more than they smoke [Rainmakers, 2017]. Research into different profiles of vaping consumers suggests two main demographics within the vaping sphere:
Quitters
These consumers aren’t particularly engaged with the category. They tend to stick to one device and just one or two flavours, often including traditional tobacco flavours, and proactively try to lower their nicotine intake.
Most interested in cigalike or pre-filled closed vaping products.
Enjoyers
These consumers are extremely engaged with the category and often try multiple devices. They embrace flavour variety, and are tending to move away from traditional tobacco flavours towards fresh and fruity variants.
Likely to prefer open systems and own a repertoire of devices, including a basic tank as a discreet device for the office – like a blu Pro Kit – as well as a ‘cloud chasing’ advanced tank when relaxing at home alone or with friends.
The company has also committed to a flexible approach to working with retailers to drive bespoke solutions that deliver the best opportunities for retailers. Hogg says: “We continue to ensure our varied range of eye-catching gantries offer the right solution to our retailers in these challenging conditions. Engaging with our traders and listening to their feedback has led to the development of hybrid furniture options, combining traditional tobacco storage with attractive new sections intended to help highlight retailers’ e-vapour products, including our blu range.”
So what is driving sales in the category? In a word, e-liquids. This part of the market is, according to ITUK, the driving force of value sales within the vaping category, responsible for a 45% share of the market (£71m) and growing by an impressive 39%. However, ‘closed’ systems (using interchangeable cartridges) still have a role to play, especially in terms of existing smokers moving into the category, as well as dualists. Closed systems represent the second largest market share with 29%, and UK sales worth £46m.
First and foremost, Hogg says retailers should ensure they offer the optimal flavour portfolio for their customer base. blu recommends a wide range, including fresh flavours like Polar Mint, fruity flavours like Tropic Tonic, savoury flavours like Vanilla Crème and of course, classic Tobacco flavour. Providing a strong range of flavours like these, all of which and more are included in blu’s new e-liquid line up, complemented by the right range of nicotine strengths, will help retailers retain existing customers, attract new ones and foster their e-liquid sales revenues.
blu’s own range of eight new flavours is available in 10ml bottles in both 0% and 0.8% nicotine strength in: Tropic Tonic, Vanilla Crème, Peach Passion, Berry Swirl, Mint Chocolate and Green Apple. Caramel Café and Polar Mint will also be available in a nicotine strength of 1.6%. Each 10ml bottle has an RSP of £4.99, and offers margins of over 40% when sold at this price.
Research conducted on behalf of blu suggests that the main reasons consumers buy e-vapour products are, in order:
- previous experiences of the product.
- flavour
- format
- price
Research also shows that traditional retail channels, including large supermarkets, independent stores, convenience stores and forecourts, rank below vape stores and online vape specialists in terms of the level of consumer experience provided when shopping for vaping products. This highlights the fact that local retailers have some catching up to do when it comes to offering vapers a positive customer experience.
Meanwhile, Japan Tobacco International (JTI) is tapping into current market trends with the launch of a new range of lower strength 6mg e-liquids under its Logic brand.
The company says the UK-made product taps into a growing consumer demand for lower strength e-liquids. Available in a range of popular flavours – Tobacco, Menthol, Cherry, Berry Mint and Strawberry – the expanded LQD range now includes 18mg, 12mg and 6mg strengths.
The 6mg Logic LQD e-liquids are available in all channels with an RSP of £5.
Stephane Berset, Head of Marketing at JTI, comments: “We have a dedicated insights team that closely tracks market trends, so we can provide retailers with new Logic products that allow them to maximise the profit potential of the category. With more than two million adult vapers [KTNS Omnibus, Q3 2017] in the UK on the lookout for more sophisticated and easy to use vaping devices and e-liquids, this focus on new product development ensures the Logic range is a must-stock for retailers.”
The new range of e-liquids can be used with any refillable device, including the company’s own Logic LQD unit.
Be visible
You can display, advertise and promote vaping products in store. Countertop units are a great way to drive visibility in store or, if space is limited, an impactful back wall display will help showcase your range. Talk to your Imperial representative if you are interested in acquiring any blu POS materials.
Be in the know
Make your store a destination outlet for vapers by being knowledgeable on the category, the consumer and the different products available. blu has produced a range of educational leaflets offering advice for retailers, so don’t hesitate to contact your Imperial rep if you’d like materials such as these.
Stock a variety of flavours
E-liquids are the biggest driver of sales in the vaping category and an important area to get right. Pay attention to what your customers are buying and offer an extensive range of flavours and nicotine strengths that will appeal to both quitters and enjoyers. Our newly-enhanced blu e-liquid portfolio has a wide range of flavours (12) in a variety of nicotine strengths including 1.6%, 0.8% and 0.0%.
Stay stocked up
Make sure you’re always fully stocked with a top brand like blu. If you don’t have a product in stock, customers may go elsewhere and not return. Stock at least one open system branded range and one closed system brand.
Don’t forget clearomisers
Clearomisers offer a simple way to upsell and drive additional sales and margin. Consumers should change their clearomiser after every two bottles of e-liquid, or with every change of flavour or brand to maximise their vaping experience.
