Electronic Cigarettes: The Vap stars

Visitors to this year’s National Convenience Show can’t have failed to notice the vast number of electronic cigarette companies vying for retailers’ attention. No fewer than 20 were on hand to extol the virtues of this booming market, which E-Lites says is expected to surpass the £120m mark by the end of this year as products continue to evolve, and understanding among retailers and consumers continues to grow.

There are now thought to be more than 40 different e-cig companies trading in the UK and selling a wide variety of different e-cig products at varying price points and with different unique selling points. Some, such as Greensmartliving which manufacturers the Super e-cigarette, have an eco-friendly business model, offering retailers 20% off their next order if they return used batteries. Others, such as Matchless, offer an array of flavours such as cherry and vanilla, while E-Lites products feature an eye-catching green LED tip. And who could forget NJOY’s smart plastic case designed to fit snuggly in the pocket, protect the e-cig, and even house one regular tobacco cigarette for those adult smokers who chose to dual between the two.

And let’s not forget the big name tobacco manufacturers who are also making strides into the market. The tail end of 2012 saw BAT snap up CN Creative Ltd, the makers of the Intellecig brand, and just last month Imperial Tobacco revealed that it had made a small investment in e-cigarette business Fontem Ventures. The standalone Imperial subsidiary is looking into the development of non-tobacco consumer products.

Providing retailers stock reliable products, the benefits of the e-cig boom to convenience stores are clear. Not only do they engender the same high footfall buying habits as traditional cigarettes, but the margins that they can offer are sizeable, in many cases up to 40%.

“Our products offer retailers the chance to double their margins - closer to £1.50 a pack,” says Bo Ekberg, vice-president of leading US e-cig company Njoy, which has just launched Njoy Kings here.

“It’s unique in the convenience industry - a high margin product that takes up hardly any space. It’s like the perfect product!”

At present UK e-cig brands sit within two broad camps: rechargeable products and disposable products. The latter currently account for the lion’s share of the market within convenience as adult smokers get to grips with e-cigs, and trial different brands and flavours.

Unlike specialist tobacconists, which tend to sell a much broader mix of more specialist e-cig products (known to ‘vapping’ enthusiasts as personal vaporizers, PVs or mods), most e-cigs on sale through UK convenience stores are designed to look, feel and taste similar to traditional tobacco cigarettes.

Successful companies such as E-Lites have been investing in technological developments and high-profile ad campaigns in the national press and on TV.

“This twin focus on product quality and brand personality is the only way to establish long-term value, particularly in a sector with many short-term market entrants seeking to make a fast buck with cheap, low-quality products coming from emerging economies,” says Adrian Everet, founder and chief executive of the E-Lites brand, which achieved sales growth of more than 300% in 2012.

“The challenge of competition from inferior products sold into the UK by short-term market entrants means there is a consistent need for us to establish and maintain a clear lead in quality through constant innovation,” he adds.

With the pool of e-cig companies vying for retailers’ attention deepening by the day, one of the best ways for retailers to enter the market with confidence is to choose a brand or supplier which is a member of the Electronic Cigarette Industry Trade Association (ECITA), says retailer and e-cig specialist Matt Gibbons of Gluggles store in York.

“If a retailer buys from an ECITA member then they can be assured that the product will meet a high standard,” he says.

With the brand chosen, where should retailers be displaying e-cigs in store? Visits to stores have revealed a wide variety of approaches, from clip-strip displays on the gantry itself to in among the tobacco accessories, or in standalone counter-top displays. This is certainly the approach that E-Lites favours.

“E-cigarettes should certainly be positioned at till point or next to tobacco products. That is where they mostly are to be found in the 14,000 or so UK outlets where they are already available and it’s where they need to stay,” says Everet.•