1. C-store vape sales flourished following lockdown
“As vape stores were forced to shut down during lockdown, adult vapers had to look elsewhere to stock up on their vaping e-liquids and devices,” says Nick Geens, head of logic and reduced risk products at JTI UK. This resulted in vaping sales growing by 33% in the convenience channel during this period [IRI Marketplace, EXT1 Convenience GB, Total E-Vapour Category, Unit Sales, Av. During lockdown to w/e 14/06/20, av. Pre lockdown to w/e 15/03/20].
Despite vape stores reopening on 15 June, sales of Reduced Risk Products in traditional retail remained 10% higher than pre-lockdown levels [IRI Marketplace, Total E-Vapour Category, Unit Sales, Av. Post to w/e 20/09/20, Av. Pre lockdown to w/e 15/03/20] – with convenience up by 15% [IRI Marketplace, Convenience].
“Whilst at first, more people were inclined to visit their local shop because of the convenience and perceived safeness, shoppers have now become more aware of the wide range of vaping products available to them in traditional retail as a result of the lockdown,” he says. “However, as retailers have now begun to build a rapport with customers and demonstrate their expertise in the category, it is likely that this extra vaping business will be retained.”
One Stop Mount Nod in Coventry has seen an uplift in sales. “Vaping is on the up,” says owner Aman Uppal, who stocks Edge, Blu and Logic. “Edge has been our bestseller for last couple of years.
“A lot of vape shops are closing, they aren’t viable any more, it’s not the destination point that people want to go. They expect everything in one place now.”
2. Vaping use dropped this year, but alternative smoking is the fastest growing category in convenience
ASH reported the first drop in vaping, with 3.2 million e-cigarette users in Great Britain recorded in March 2020. Prior to this, the category had seen consistent growth of over 400% since 2012, reaching a high of 3.6m in September 2019.
However, alternative smoking (vape, e-liquids & heated tobacco devices) has taken the lead in convenience category growth, up 34% year-on-year in September 2020 and 3% month-on-month, according to The Retail Data Partnership Ltd. Higher % YOY performance can be explained by lower sales last year suppressed by media hype about vaping related deaths in the US and worldwide, claims the group.
Vapemate CEO Simon Manthorpe claims that growth is also thanks to c-stores expanding their vape offer. “Overall, the convenience channel is now seeing growth of market share for vape products and this is in no small part due to the broadening range of availability and moving eliquid displays to the floor where possible,” he says. “Putting the products on the floor removes the barrier for a curious customer who previously had to wait until they reached the checkout to be able to properly see the vaping products.”
Avtar Sidhu, who owns Budgens Kenilworth in Warwickshire, has taken his offer to the next level, teaming up with Aquavape to create a store within a store last November. “The vape store has been phenomenal - we’re doing £5-6,000 a week out of that,” he says. “We weren’t even doing it 18 months ago.”
Aman is also taking advantage of the category’s strong performance and expanding. “Over the next six months we’re looking to incorporate a more in-depth vape range, something off the counter,” he says. “There are so many different brands and products. If you’ve not taken the time to research it and invest in it properly it’s a bit of a minefield. We’re not going in blind, we’re getting our information and speaking to brands.”
3. Closed systems are winning favour
Closed systems have now overtaken open systems across the total category in tracked channels (IRI value sales, week ending 02/08/2020). “Based on that growth, it’s believed closed systems will continue to drive category growth as adult smokers look for simpler and more convenient alternatives to cigarettes,” says John Patterson, sales director at Juul Labs UK.
Derek Li, international business unit lead at SnowPlus claims that retailers and consumers are recognising the benefits of the closed pod format. “Closed pod systems are the simpler devices for adult smokers looking to switch to vaping, they’re also an easier conversion for retailers given the ease of use, convenience and that they require minimal training in-store.” SnowPlus claims to be the second biggest vaping brand in China and launched SnowPlus Lite (rrp £14.99) and SnowPlus Pro (rrp £24.99) vaping pens this month. SnowPlus Classic Pods are available in five different flavours – mint, classic tobacco, lychee, mango and grapefruit (rrp £7.99 for a pack of three).
Pod sales more than doubled year on year over the last two years, states Manthorpe. “The newer, smaller footprint technology is going to be key in converting the remaining 6.5m smokers in the UK and has the most growth potential in convenience of all vape formats,” he says.
Geens concurs: “Closed tank devices or pod mods, such as our Logic Compact device are continuing to rise in popularity and are currently the fastest growing segment in the UK [IRI Market Place, Unit Sales, Total E-Vapour Category, Total UK, Latest 3 Months to Jun 2020 vs Latest 3 Months YA]. These devices offer an ideal starting point for those new to the category.”
Duncan Cunningham, UK corporate affairs director at Imperial Tobacco & blu agrees. “Overall, pod-mod systems like myblu are becoming increasingly popular thanks to their ease of use and flexibility,” he says.
4. Fruit flavoured e-liquids are the most sought after
The UK’s most popular flavours are fruit (28%), followed by tobacco (20%) and then menthol (20%) [Kantar / Online One Tracker: Q1 2020]. “Vapers are becoming more experimental with their vaping choices, resulting in an influx of new flavours and strengths in the market,” says Geens. “In line with this, we have also launched new Logic EPIQ flavours available in HVG and nicotine salts ranges to cater for those vapers looking for a more enhanced experience.” The nicotine salt variants are available in amber tobacco, peppermint, berry mint and forest fruits, whilst the new High VG range comes in: berry crumble, coconut macaroon, cherry apple and mint royale.
Retailers should consider stocking a broad range of flavours and strengths, advises Imperial’s Cunningham. “Market insights have shown that adult smokers need to experience different flavours before moving from tobacco to vaping. There is a growing trend for consumers looking to purchase fruity flavours, which is why the myblu range also includes menthol-based flavours that combine fruity elements.”
One Stop Mount Nod has been giving customers a fruity fix. “Fruit flavours are our bestsellers,” says Aman. “Blueberry, blackcurrant, summer fruits and strawberry flavours are top sellers.”
5. Nicotine salts are rising in popularity
Nicotine salts (nicsalts) have seen 17% growth in the convenience channel [IRI Marketplace, EXT1 Convenience GB, Closed Tank Refill Segment, Unit Sales, Latest 4 Week Av. Vs 2020 Av. To w/e 15/03/20]. “As existing adult vapers seek out a more enriched vaping experience, this growth is set to continue, and retailers should ensure they stock and maintain a full range in order to maximise sales,” says Geens.
Cunningham has also witnessed this growing trend. “Over the past year within traditional retail, nicsalts have grown to become the preferred liquid for pods [ITUK Estimates August 2020],” he says. “Nicsalts result in nicotine being absorbed into the body faster than normal e-liquids. This rapid absorption of nicotine through nicsalts allows products like myblu Intense to more closely replicate 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.
“For open systems, the most popular strength for liquids is 6-12mg/ml and over the past year consumers have been switching away from 15mg/ml+ strength. There has also been an increase in the number of consumers buying low strength liquids of less than 6mg/ml [ibid].”
Aman is keen to grow his nicsalts offering. “E-liquids are stronger for us, but we do sell nicsalts and it’s something we’re looking to expand our range on,” he says.
6. Menthol vaping sales have grown since the menthol cigarette ban
John Patterson, sales director at Juul Labs UK, says: “If we look at total sales across closed and open systems in the twelve weeks pre and post the removal of menthol cigarettes, IRI figures show the vaping category in tracked channels grew by 12.6%, with sales of menthol products up 44.6% [IRI value sales 12 weeks to 17/05/2020 v 12 weeks to 09/08/20]. Moreover, menthol and mint products contributed to almost 60% of all growth in the category, with menthol products up 45% in value and responsible for 36% of all growth [ibid].
“Sales of tobacco flavours also rose 4% with mint and other flavours increasing by around 10% each [ibid] - suggesting that many menthol smokers have made the transition to the closed pod vaping category to try menthol flavours in particular.”
He claims that Glacier Mint JUULpods have remained the number one refill kit in the closed pod sector in the UK since May and Menthol JUULpods, which launched in April, have performed strongly.
Geens has also witnessed a boost to menthol lines. “With menthol and capsule cigarettes now banned, some shoppers are turning to alternatives, and we’ve found menthol e-liquids (the Logic range) to be one of these alternatives,” he says. “Retailers should continue to monitor the trends that develop post-ban and stock products that meet new customer needs.”
7. The majority of smokers want to quit and new research shows vaping can help
Around 60% of adult smokers want to quit, reveals the latest ONS Adult Smoking Habits in the UK study.
What’s more, e-cigarettes are 70% more effective in helping smokers quit than nicotine replacement therapy, according to an international review produced by Cochrane, which was published earlier this month.
Deborah Arnott, chief executive of ASH said: “About a third of smokers have never even tried an e-cigarette and less than 20% are currently using one. If many more smokers could be encouraged to give e-cigarettes a go, the latest evidence indicates that many more might successfully quit.”
Transitioning away from cigarettes is extremely difficult for some adult smokers and offering a wide range of alternatives is critical, so that they can see which products work best for them, claims Juul. “Retailers can help with this by stocking the bestsellers across all smoking alternative sub-categories, offering adult smokers a range of options,” says Patterson, adding that retail education is key.
Cunningham supports this view: “Retailers need to be prepared to proactively offer 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.”
Understanding the market is essential in order to stock the right products and also educate customers, claims Sid, who works closely with Aquavape and PMI. “It’s about investing time,” he says. “I’ve had to work at this. It hasn’t happened by chance or luck. There’s been an action plan and we’re working in collaboration with a company.”