The e-cigarette market is a hard one to quantify because of the various points of sale through traditional cigarette outlets such as convenience and forecourt stores, as well as through high street 'vape' shops and, of course, the internet. But there's no doubting the popularity of these products. Nielsen has pinpointed e-cigs as "one of the fastest growing FMCG sectors" with sales up 18% and estimates the market to be worth over £400m.
Figures vary but anywhere from 1.5 million to 2.6 million people are now said to be using e-cigs in the UK. And this figure could rise if e-cigs are prescribed by the NHS to help smokers give up tobacco. There have been many stories in the mass media about this but it's still difficult to gauge when this might happen as calls from Forecourt Trader to the Department of Health, NICE and the Medicines and Healthcare Products Regulatory Agency (MHRA) resulted in no definitive answer.
There may be a wide range of e-cig brands and products available in the total marketplace, but JTI's head of communications, Jeremy Blackburn, says consolidation continues. "The fact that tobacco firms are involved in the category is good news. JTI, for example, is looking at investment and opportunities to create more choice for consumers."
When JTI acquired E-Lites, the tobacco giant took on the brand's original offering but the range has already evolved to include the successful E-lites Curv. Blackburn says E-lites is the most recognised name in the marketplace and the launch of Curv has gone really well with lots of repeat business. Indeed, according to Nielsen data, E-Lites Curv is the fastest-growing rechargeable starter kit on the market. It has benefited from its unique oval shape and simple one-touch charging system, which Blackburn says has really made it stand out in the marketplace.
And he adds that JTI's acquisition of US e-cig brand Logic gives the company the flexibility to get into tank systems.
Blackburn believes that as 99% of vapers are ex-cigarette/tobacco smokers, tobacco and e-cigs will continue to co-exist in the market, but he says there is a lot of work to do in helping consumers understand these relatively new products.
"It's important to educate staff as the category becomes slightly more technical, ie with tank systems so staff need to be able to advise on tanks and liquids and things like battery replacement," says Blackburn. "This is really important. If retailers are serious about selling e-cigs then they need to educate their staff about what's the difference between the different products so they can answer simple questions from consumers such as 'what do I need?'. Staff need to be trained, which is why we at JTI have invested in 'upskilling' our sales force so they understand the e-cig category.
"If a consumer is looking to use an e-cig they will go in and buy one. If they get good sales information from the staff they will go back as they trust the store and have a reason to visit again. Staff need to be prepared for questions as chances are that smokers will make the decision to try an e-cig at the time they were intending to buy tobacco."
Jenni Roberts, category and shopper marketing controller at Blu (UK), says the biggest things retailers can do to boost sales is to make e-cigs visible and available. "Highlighting your e-cigarette offering in the shop window to tell potential customers that your store sells a range of quality e-cigarettes will drive new customers into your shop. Knowing where to buy them is still one of the more frequently asked questions we get from consumers.
"Consumer and retailer education as well as visibility and pos in store are key to ensuring lucrative e-cigarette sales and continued category growth. Almost 30% of consumers said they would choose to shop elsewhere if their first choice e-cigarette brand was not available in-store so make sure you're stocking two to three of the top five brands in the convenience channel, which are: Blu, E-Lites, Nicolites, Vivid and MV."
Roberts says Blu UK works with retailers and can offer strong category advice, knowledge and know-how of the market trends and consumer preferences (based on extensive research), to help strengthen retailers' e-cig offering. "Blu UK is committed to providing a high level of support to retailers, helping customers to understand this evolving category and maximise their sales. As a company we pride ourselves on having the best knowledge of the market and understanding of consumer preferences, and we want to share this with retailers and ultimately their shoppers."
Blu UK is particularly keen to help retailers with merchandising and pos solutions. The company provides these for different channels. Items available include freestanding units for the till point, door stickers, window posters and wobblers.
Blu UK is also supporting retailers via the roll out of branded tobacco gantry shutters. The company says there will be over 10,000 shutters nationwide.
The e-cigs market breaks down into rechargeables, accounting for 56% of sales; tanks currently representing 27%, but these are in growth; with the remaining 17% attributable to original disposable types of e-cigs.
Roberts advises that retailers should stock a range of products to cover all vaping needs with both disposable and rechargeable e-cigs stocked for new users as well as vaporisers and e-liquid refills for experienced vapers.
"Refillable and e-liquid formats are the fastest-growing areas in the UK due to the value savings, greater flavour range and the increased product performance they offer. More and more consumers are entering the category for the first time straight into 'open' liquid systems. Nielsen figures show that 55% of value sales in the impulse channel are through e-liquids and e-liquid systems, and this trend looks set to continue." She says for Blu, the top selling e-liquids are Classic Tobacco and Menthol, however, fruit flavours including BluBerry, Cherry and Strawberry Mint are growing.
Christian Mulcahy, business development director at MultiCig, agrees about the popularity of liquids: "We would say the move to e-liquids is the biggest trend. Those who are new to vaping will typically start off by choosing a tobacco flavour, but as they progress they will often explore different flavours. Lower nicotine strengths are also growing in popularity. Battery and coil technology has improved and devices are now able to achieve a similar vaping effect with e-liquids containing a lower level of nicotine content."
But Gavin Anderson, general sales manager for Republic Technologies (UK), believes there is still a question mark over the quality and provenance of many e-liquids currently available in the UK. He says: "Our OCB e-Liquids deliver not only on price, but also in terms of ingredients, strict manufacturing guidelines and choice." OCB e-liquids are manufactured in Republic Technologies' facility in France. The range has five flavours (American Tobacco, Virginia Tobacco, Fresh Mint/Menthol, Red Berries and Coffee) in four strengths 0mg, 6mg, 11mg and 16mg.
Finally, the e-cig suppliers are making the most of being able to advertise their products by investing heavily in marketing support. Last year Blu had an extensive sampling campaign, appointed a celebrity ambassador (DJ and model Zara Martin) and sponsored awards.
Vivid Vapours ran an ad campaign throughout December to drive awareness of its new vaping technology.
Meanwhile, E-Lites made the most of anticipated New Year sales by advertising on TV and in the national daily press.
And MultiVape has a "heavy communications strategy" in place for 2016 including integrated PR, digital marketing, marketing, traditional print advertising and social media.
Blu's top merchandising tips
Stock the right brands to drive sales. Almost 30% of consumers said they would choose to shop elsewhere if their first choice e-cigarette brand was not available in-store (IPSOS). Make sure you're stocking two to three of the top five brands in the convenience channel, which are: lu, E-Lites, Nicolites, Vivid and MV.
Stock a variety of products to cover all vaping needs. Both disposable and rechargeable e-cigarettes for new users and vaporisers for experienced vapers.
Merchandise e-cigarettes next to the tobacco gantry to ensure visibility. Three out of five vapers are dual users (ASH), using both e-cigarettes and traditional cigarettes, and prefer to see e-cigarettes placed near tobacco products.
If you have space, a freestanding unit placed near to the till will grab customers' attention. The Blu units, for example, offer attractive margins, with up to 70% profit on return, including free stock.
Know your e-cigarette products. Talk to your shoppers and guide them through your product offering to find the best vaping solution for them. Your shoppers will come back and be happier to buy again and again.
E-cigs and the law
From May 2016, the Tobacco Products Directive 2 (TPD2) will establish new rules for the safety, quality, composition and presentation of consumer e-cigs.
According to ASH, products which contain less than 20 mg/ml of nicotine and have not opted in to medicinal regulations ie do not wish to make claims relating to smoking cessation, come under TPD2.
Regulatory officers will be responsible for ensuring a number of measures are met including that:
Products are child and tamper proof;
Health warnings, instructions for use, information on addictiveness and toxicity appear on the packaging and accompanying information leaflet;
There are no promotional elements on packaging;
All substances contained in the product and information on the nicotine content are listed;
A size limit for e-liquids of 10ml for dedicated refill containers and 2ml for electronic cigarette cartridges and tanks is adhered to.
On 1 October 2015 it became illegal:
for retailers to sell e-cigs or e-liquids to anyone aged under 18;
for adults to buy (or try to buy) tobacco products or e-cigarettes for anyone aged under 18.
Retailers in breach of this law face a £50 fixed penalty notice or a maximum £2,500 fine. Where there are repeated breaches the court can impose a Restricted Sales Order or a Restricted Premises Order prohibiting a named individual or named premises from selling nicotine-inhaling products (the inhaling device, cartridge or refill) or tobacco to anyone for a period of up to one year.
E-cigs in the workplace
E-cigarettes just like real cigarettes are prohibited in the dispensing area of the forecourt but what about elsewhere in the workplace? Everyone knows the rules about smoking in the workplace but what about using e-cigs? ACAS has guidance available via its website (www.acas.org.uk). This says that as e-cigarettes fall outside the scope of smoke-free legislation (as the act of smoking requires a substance to be burnt) so employers can choose whether to allow employees to 'smoke' e-cigs at work or not. Obviously no-one expects to see the cashier puffing on an e-cig behind the counter, but what about elsewhere in the workplace in the convenience store stockroom for instance, or out the back away from the forecourt area?
ACAS says that as e-cigs are substitutes for cigarettes and often used as an aid to stop smoking, employers may want to support their use, but employers must also consider the effects on other members of staff, as the long-term effects of e-cigarettes are unknown.
It advises employers to be clear about what their rules are on the use of e-cigs at work. If they already have a policy on smoking or one on drugs and alcohol then they could include a paragraph about e-cigs in there too.
And it should be made clear that any smoking of cigarettes or e-cigs in a prohibited area at work will result in disciplinary action.
Mohammed Saqib, Euro Garages, Solihull:
"E-cigarettes have proven very popular to our business, in particular the Blu brand has been a standout performer for us as it's customer facing on the till.
"Having the Blu display by the till has really helped boost sales as it means it is the first brand our customers see when choosing their e-cigarette.
"We stock all of the Blu range; the most popular items are disposables followed by e-liquids.
"I think this is because our customers are on the go, so they pick up a disposable if they have forgotten their vaporiser.
"Customers ask a number of questions about e-cigs, but with the education we've been given from Blu we are able to provide an answer that helps them make the right choice when choosing their e-cigarette.
"The most common questions are often about the financial benefits and the similarities to smoking, especially for current smokers looking to change to e-cigarettes.
"Having a good understanding of the Blu range has also helped us provide extra guidance to customers and secure sales when customers have been unsure of what products to purchase."