Getting a flavour for e-cigs

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Our C-Store Champions and industry expert Jeremy Blackburn discuss the success of the e-cig category and where it’s headed next.

Ramesh Shingadia, two Londis stores, Horsham, West Sussex

Ramesh is keen to extend his knowledge of the e-cig category and pass on his expertise to shoppers

Lionel Cashin, The News Shop, Market Weighton, Yorkshire

Lionel is seeing good sales from capsule systems, with customers keen to try out different flavours

Harry Goraya, Rosherville Post Office, Northfleet, Gravesend, Kent

Harry believes shoppers now expect c-stores to stock similar ranges to those found in specialist e-cig shops

Jeremy Blackburn, JTI head of communications

Jeremy has wide industry knowledge gained from working in sales and trade communications as well as in his current role at JTI

What are the most popular devices in your store?

Ramesh: Disposables are the most popular devices in our store, as well as the refills and rechargeables. People tend to move from tobacco to disposables to begin with as that’s the cheaper option in the short term. This allows them to try e-cigs a few times before eventually deciding it would be more cost effective to get refillable or rechargeable products.

Lionel: The traditional liquids you pour into e-cigs have been replaced with the more sophisticated capsules which means users no longer have to mess around with the liquid. That’s been a big success. People seem to be much more knowledgeable now about the breadth of options available and are trying the full range of flavours. People seem to enjoy trying different flavours, and with menthol tobacco cigarettes being banned soon I think that’s going to be another part of the attraction to the e-cig category. The most popular flavour for us is Berry Blast, which I think is interesting as you would expect ex-smokers to go for the traditional tobacco flavour.

Harry: We sell four different brands: Vivid; Blu; E-Lites; and Logic Pro. I have found that Logic Pro is the most popular because it has a good price point. The unit itself is £9.99 and the capsules are £3.99, but they have a limited range of flavours. The Vivid capsules are selling well, too.

Jeremy: Vapers are looking for brands which they trust and which offer a premium, high-quality experience. Retailers should reflect this trend in their e-cigarette range by ensuring products from mainstream suppliers are always stocked. Tanks are increasingly the most popular vaping device type and JTI has seen great success for Logic Pro in the independent channel as a result. 

Would you say you are a category expert? 

Ramesh: No, I wouldn’t – and most retailers would say their knowledge is patchy. No-one is an expert on the whole category yet, although there are patches of knowledge.

Lionel: I’m quite confident about talking to anybody about the e-cigarette category. I get my knowledge from suppliers and from the trade press, in particular Convenience Store, which does have a lot of helpful articles and features on the subject.

Harry: I wouldn’t say that I’m an expert, but I’m certainly on the ball when it comes to the products. I also try to keep up with the legislation changes.

Jeremy: To help, JTI has developed e-cigarette category guides and training modules on JTI Advance so that retailers can train their staff, fill knowledge gaps and help them to become more confident when speaking to customers about the category.

What resources and tools are available to support the development and best practice category management for e-cigarettes?

Ramesh: The JTI website is a great website and a useful resource. They take you by the hand and educate retailers on the whole process and the changes that are happening. A lot of what retailers need to know is on manufacturers’ websites. However, with plain packaging and TPD2 changes, manufacturers need to speak to retailers directly to get the message across

Lionel: How we display the product is simple because we have a dedicated stand provided by the supplier, which works for us. As far as category management goes, our epos informs us which products are selling or not, and we adjust our stock accordingly. To be honest, I haven’t looked at other suppliers’ websites for advice. I haven’t yet been asked by any shopper for a particular brand of e-cigarette so I have been happy to continue with the Vivid range.

Harry: There are plenty of resources online. We have good links with JTI and Imperial and we go to their websites to get all the information we need. They email us to alert us to news as well.

Jeremy: Supporting retailers with advice is a key priority for JTI. Our sales force is trained to deliver industry-leading information, while training modules and downloadable category guides are available online at JTIAdvance.co.uk.

What do you think suppliers should be doing differently?

Ramesh: I think JTI has been helpful with its website, but I think sales reps need to be taking the time to talk through the changes with retailers. Equally, though, retailers need to take responsibility for getting to grips with what’s happening and making sure they are compliant with all the new legislation.

Lionel: I’m happy with the way my supplier works.

Harry: They should help retailers to get a better understanding of the different products and how they work. When consumers ask questions, retailers don’t always have the answers. I think the supplier websites do have good FAQ sections for this sort of thing, but retailers don’t have the time to go trawling through the web pages or trying to teach themselves the mechanics of products. That’s something that the suppliers need to speak about to retailers directly.

How do you communicate the upcoming TPD2 changes to your customers?

Ramesh: A lot of it involves word of mouth. As we start cutting down on some of the 10-packs we are explaining the changes to our customers. We also have notices posted up around the shop. It’s important to train your staff to be able to get the message across to the customers, too. The changes are definitely not widely understood by customers yet. We have leaflets provided by JTI which we will be giving out in the run up to May 2017, when the stock of certain packs starts drying up.

Lionel: We are communicating the changes verbally. Every time someone buys a 10-pack I tell them these won’t be around from next May. Their response is just to shrug their shoulders. I think they hate the new images on the packaging, but they will still buy them, and once they’re over the initial shock they won’t even notice them anymore. If we look at the evidence of generic packaging in Australia, all that might happen is that illicit sales of tobacco might increase, which just means less money for the tax man and less money for retailers.

Harry: We are just starting to tell customers about the new plain packaging and the change  to pack sizes. We also have a leaflet which JTI dropped off last time they were in and we have put one up on our gantry. It gives information about the new legislation and directs people to its website. This is handy for handing out to customers.

Jeremy: As retailers are likely to be asked more and more questions by consumers over the coming months, JTI has launched a consumer awareness campaign that includes a new website, posters and leaflets. The website, www.packchanges.co.uk, includes detail on what, when and why the changes are taking place.

What would you say to a retailer who is yet to tap into the e-cigarette market?

Ramesh: All c-store retailers really need to be on top of e-cigs now, because that’s where the future is. Retailers yet to tap into it need to act quickly to make the most of the market.

Lionel: You are throwing money away by not selling e-cigarettes. We get a fantastic margin – better than tobacco – so from the retailer’s point of view it’s a much-needed addition to their profit contributions.

Harry: You are missing a trick. It’s the direction the industry is going and consumers are certainly getting into it.

Jeremy: E-cigarettes generated £158m in retail sales over the past year (Nielsen ScanTrack FY 2015 traditional retail sales value of e-cigarettes – not including online sales or vaping stores) so retailers really should be making the most of this profit opportunity, and make sure they stock up on the right products. It is important not to overwhelm consumers with too much choice, but instead stock top sellers from mainstream suppliers.

How do you see the e-cig market developing over the next 12 months?

Ramesh: E-cigs are a category that we will start working on more robustly because the TPD2 changes are causing it to be an evolving market. We are not sure how customers will react to price hikes and buying bigger packs of tobacco. It’s very much uncharted waters.

Lionel: It’s interesting that most of the market is being bought out by the large tobacco houses and I think they are all looking at ways to develop this category as a way 
of maintaining their business model. They will be looking to innovate and I would personally try stocking any innovation they come up with.

Harry: Hopefully, manufacturers will continue to listen to retailers about what customers want, because customers want more flavours and more personalisation of the devices.

Jeremy: We expect to see the e-cigarette market continue to grow year on year. To ensure retailers can tap into this profit opportunity, JTI will continue to support retailers through a combination of expert advice and quality products to broaden the range. Uniting all of JTI’s e-cigarette products under one name, we’ll also see E-Lites change its name to Logic over the coming months.

What developments have you seen over the past year?

Ramesh: The e-cig category is a growing market. We’ve seen a growth in sales of e-cigarettes and quite a few new variants coming on to the market, with lots of new flavours coming through to entice a wider audience.

Lionel: We’ve had the Vivid range right from the off. Traditionally, this range was made up of lots of liquids which are poured into e-cigarettes, but these have been replaced with more sophisticated capsules and shoppers find these are easier to use. That has been a big success and people seem to enjoy trying different flavours.

Harry: For me, the main development has been the move from liquids towards capsules. It’s been a positive step because some of the current liquids available were causing problems.

Jeremy: With more than two million existing adult vapers now using e-cigarettes (TNS Omnibus MAT Q2 2016), the category continues to grow and flourish. Driven by innovative, quality product launches, tanks is the fastest growing sector (Nielsen ScanTrack year to 1 October 2016 vs previous year). We’ve also seen a growing demand for sleeker and design-led devices and JTI has matched its NPD to these trends so retailers can maximise sales.

How do you merchandise your range?

Ramesh: Unlike tobacco, Ecigs are on display at the checkout and we’ve given more space to them over time. Nobody has really come up with a solid planogram on how to display e-cigs yet. They’ve created generic ones, but nothing bespoke.

Lionel: We have a dedicated stand which Vivid has provided us. It makes the product very eye-catching and shows clearly the full range that’s available. I wouldn’t say it is good enough to stop people in their tracks because people already have to be thinking about buying e-cigs before they do so. However, I would say that it catches people’s eye and so it might have the potential to put the idea in their minds.

Harry: We’ve got a cabinet which was supplied by Vivid, but it’s not really sufficient for our range any more. People are discovering bigger, flashier and more personalised devices in specialist e-cigarette shops and coming here asking if we sell them, so we definitely need to expand our range further.

Jeremy: JTI will work with retailers to come up with the right solutions for them. Stockists of Logic Pro should take advantage of the Logic Pro point of sale display unit which has been designed to sit on top of the counter and showcase the products available. 

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  • e-cigarettes
  • Ramesh Shingadia
  • Lionel Cashin
  • Harry Goraya
  • JTI head of communications Jeremy Blackburn
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