FOCUS ON TOBACCO AND VAPING: Huffing and puffing

Remember when e-cigs and vaping products were the best thing since sliced bread? How they were going to get cigarette smokers to switch to a better-for-them option, which would eventually get them to give up inhaling any tobacco substance?

There’s no doubt that vapes have been a tremendous success, creating a profitable new category for retailers including forecourt store owners. But with success comes a spotlight and that has shone harshly on the industry, particularly with regards to a worrying number of under-age vapers.

Candyfloss and other sweetie flavours that attract youngsters are on their way out as are disposable vapes which will be banned in England, Scotland and Wales next June. Trading Standards will be given more powers to punish retailers who sell vapes to kids and there’s even talk of a vape licensing scheme.

On top of all this, there are even stricter restrictions on their way for traditional tobacco products with an age ban likely to come which would stop anyone born after January 1, 2009, from ever being able to legally buy these products.

However, the forthcoming restrictions are not the end of the road for the vaping sales success story. It seems retailers are already making plans ahead of the changes.

Rusdene Services, a company that is ‘bubbling under’ in Forecourt Trader’s Top 50 Indies list, has five sites with two proper ‘store-within-a-store’ vape departments at Lee-on-the-Solent and Waterlooville, and scaled-down versions at the other three. Vape turnover across Rusdene’s five sites is an impressive £65,000 a week.

Managing director Oli Lodge says: “Disposables have dominated the category for the last few years and driven sales, but since the announcement of the impending ban, sales of disposables have definitely dropped off.

“From our point of view part of this decline in disposable sales has been planned. We have worked very hard over the last 12 months to try and convert disposable vapers to more cost-efficient, pod-based systems – by doing this we hope to retain their custom after the disposable ban. If you take our busiest store Waterlooville, 12 months ago we had a participation of around 75% on disposables and now this is 46%.”

Significant impact

Anis Safri, sales director at IVG says the forthcoming generational tobacco ban and potential vaping restrictions are likely to have a significant impact on consumer behaviour as well as product development.

“Consumers may turn increasingly to nicotine alternatives as traditional products become less accessible. This will drive innovation in the nicotine alternative space. We are continuously adapting our product portfolio to align with regulatory changes. We’re increasing our focus on closed pod systems and nicotine pouches. These products align better with emerging regulations and consumer demand for convenience and reduced health risks.

“Recently, we launched a new line of pod kits (IVG Air 4 in 1 and IVG Air 2 in 1) that feature innovative coil technology for improved flavour delivery and efficiency. We’ve also introduced an array of nicotine strengths in our nicotine pouches (15mg and 20mg) and have expanded our flavour line-up to include unique blends, like Cola, Spearmint and Ice Mint, to cater to a broad range of consumer tastes.”

Safri says his team are advising retailers to stay informed and proactive in adapting their product ranges. “It’s important they focus on stocking next-gen products like refillable pod systems and rechargeable devices with replaceable pods, which are more likely to comply with future regulations. Additionally, educating consumers about these alternatives will be key to maintaining customer loyalty. Retailers should also work on diversifying their product lines, offering nicotine pouches and other non-combustible options. While most retailers are aware of the proposed changes, there’s still work to be done in terms of understanding the long-term impact on their business models. We’re working closely with our retail partners to ensure they’re fully prepared for the shift and can continue to meet consumer demand in a compliant way.”

Safri believes a ban on disposable vapes could have a multifaceted impact. “On the one hand, there is a risk of some consumers reverting to traditional tobacco products if they feel there are no convenient alternatives. However, our focus is on educating customers about refillable pod kits and nicotine pouches as viable, cost-effective alternatives. There is also the concern that a black market for disposables could emerge, potentially increasing illicit trade. To counter this, clear communication and easily accessible, compliant products will be key in keeping shoppers informed and engaged.”

He says it is essential for government authorities to strengthen their enforcement measures to prevent the rise of illicit trade. Strict action against the black market will protect both consumers and legitimate retailers, ensuring that they do not suffer losses due to illegal sales. Retailers may see a short-term dip in profitability, but by shifting their focus to next-gen products, they can continue to meet demand and sustain long-term growth.”

Sales in their Prime

At Top 50 Indie Plaistow Broadway Filling Station, tobacco sales are still holding up in some of their stores, which is probably down to location and local demographics, but across the board, vape sales are growing.

Area manager for Plaistow Broadway Sharon Hughes says some customers are aware of the forthcoming changes in the rules. “Some people come in and ask questions about the changes in the law on vaping but it doesn’t stop them buying them. Lots of our customers have moved from tobacco to vaping – where we lose tobacco sales we tend to gain on vape sales. Vapes are very profitable; we make brilliant margins sometimes as much as 50%.”

She likens vapes to the Prime Energy Drink phenomenon. “When Prime first came out everyone wanted to try it and it’s always the same with new vapes. The younger vapers love trying new flavours. Where cigarette smokers may go and buy one brand, vapers like to try new things. They buy more on impulse if they see something new and they love the ‘3 for £10’ offers we have in some stores.”

The Crystal brand is the company’s best seller but Lost Mary is a good seller too. “We stock our regular brands but if the margin is there we will always stock new lines.”

High puff count

At Elfbar, associate general manager, Angelo Yang, advises retailers to focus on offering a balanced range of high-demand products, including single-use, prefilled pod and open-pod systems, along with a variety of e-liquids and pod flavours.

“A key aspect of this approach is to gradually shift to stocking more rechargeable and reusable devices. This will help retailers prepare for the single-use ban and maintain sales by ensuring adult smokers are supported with viable alternatives to replace what has become the tool of choice for many wanting to quit smoking.

“Striking the right balance means engaging with customers to understand their preferences and staying informed on market trends and regulatory changes to adapt product ranges accordingly.

“Proactively informing adult customers about the availability of alternative options to single-use vapes in preparation for their eventual phase-out is also key. Here we find prefilled pod systems, designed to capture the convenience and ease of use of single-use vapes, are gradually rising in popularity.

“Retailers should also include high puff count devices in their portfolio, as sales data from Circana shows a notable and growing demand for this product category.”

And Yang says given the prevalence of the illicit market, which many expect will increase following the single-use ban, retailers should communicate the dangers associated with illegal and non-compliant products to their staff and customers.

To meet the growing demand from adult smokers and ex-smokers for high puff count products, Elfbar introduced the AF5000, available in 29 flavours. And its sister brand, Lost Mary, released the BM6000, which is available in 16 flavours, with more to be added soon. Yang says both are performing well sales wise.

Lost Mary also recently launched the 4-in-1, which delivers up to 3,200 puffs and holds four 2ml prefilled pods. And Elfbar has just introduced its 4-in-1 prefilled pod kit.

“Flavours are integral in encouraging adult smokers to adopt vaping, as noted by the Royal College of Physicians, who advise that a range of flavours should be available to facilitate quit-smoking attempts. Both products allow adults to switch between four flavours in one device, offering a diverse flavour selection that supports smokers in their transition.”

Pouch push

Prianka Jhingan, UK head of marketing at Scandinavian Tobacco Group UK (STG UK), says nicotine pouch sales are really gathering pace in the UK, with latest IRI data showing the category is now worth just over £110m in annual retail sales – a figure which doesn’t include online sales. “This reflects year-on-year growth of 88% in volume terms, offering clear evidence to its growing popularity and consumer demand.”

Jhingan says that just four months after launching XQS, it has already become the sixth biggest-selling pouch brand with a market share of 1.1%.

“The anecdotal evidence we’re getting from retailers and consumers is very positive. We really believe in this brand and think it genuinely brings something different to the market, and that’s for two specific reasons. Firstly, and most importantly, XQS is all about high quality and long-lasting flavour which we feel confident is better than the other brands out there. We know once consumers try it, they love it! Secondly, it would be the uniquely smaller sized pouches which ensure a perfect and delicate fit under the lip.

“It’s also definitely worth reminding forecourt retailers that nicotine pouches offer attractive profit margins in general, but I’m pleased to confirm that XQS in particular offers one of the highest margins of all pouch brands, which is yet another reason to ensure you are well-stocked.”

He says that with the upcoming disposable vape ban, it is likely many consumers will be looking for alternative next gen products. “We’d advise forecourt retailers to talk to their regular customers to let them know what their options are. Nicotine pouches like XQS are likely to see a surge in sales as they offer consumers a very credible and attractive alternative due to their exciting flavours, discreet nature and ease of use.”

Growing the accessories market

Despite the restrictions faced by the broader tobacco market, the £402m tobacco accessories category continues to perform strongly, growing at 13.8% as more consumers turn from factory-made cigarettes to roll-your-own tobacco (IRI data).

Against this backdrop, Republic Technologies (RT) is looking to broaden the appeal of its best-selling Swan filters range with the launch of Just Paper – an environmentally friendly range of 100% plastic free filter tips.

The Just Paper range features a ‘flip-a-tip’ design which dispenses loose extra slim filters, without the use of plastic rods. Each box contains 120 filters, with 10 boxes per outer (rrp £1.45).

RT says, in a market first, Just Paper filters provide consumers with an experience that is very similar to traditional cellulose acetate filters, but with a much lower environmental impact.

“The Just Paper range represents a breakthrough in the development of filter tips with a significantly reduced impact on the environment,” says RT’s sales and marketing director, Gavin Anderson.

“There’s more to do on this journey but innovation of this kind is a major step for the brand and category in terms of sustainability and consumer demand. We’re confident that it will attract new shoppers to Swan, strengthening its position as the brand of choice for retailers and roll-your-own shoppers.”

 This story has been updated to include the new date of the disposable ban.