The good news is that the UK vaping market is booming worth over £1bn according to Nielsen. The not-so-good news is that sales through traditional retail channels (think supermarkets, convenience stores and forecourts) account for just under £160m of that and Sophie Hogg, head of next-generation products (NGP) at Imperial Tobacco, says they appear to be stalling as consumers gain confidence in the category and purchase via alternate channels such as specialist vape stores and online.
"As a result of the shifts in consumer tastes and purchasing behaviour, we predict that the overall category will continue to grow, albeit at a slower pace as the market matures, and will be largely driven by flavoured e-liquids and open system devices, including blu’s Pro Kit," says Hogg.
There are around three million vapers in the UK, 40% of whom have started using vaping products in the past six months. Ninety per cent of users vape regularly, with 50% vaping more than they smoke (Rainmakers U&A study).
Hogg says research into different profiles of vaping consumers suggests two main demographics:
Quitters these consumers aren’t particularly engaged with the category. They tend to stick to one device and just one or two flavours, often including traditional tobacco flavours, and proactively try to lower their nicotine intake. They are most interested in ’cigalike’ or pre-filled closed vaping products.
Enjoyers these consumers are extremely engaged with the category and often try multiple devices. They embrace flavour variety, and are tending to move away from traditional tobacco flavours towards fresh and fruity variants. They are more likely to prefer open systems and own a repertoire of devices, including a basic tank as a discreet device for the office like a blu Pro Kit as well as a ’cloud chasing’ advanced tank when relaxing at home alone or with friends.
Says Hogg: "Understanding these different consumer profiles and appreciating what they are looking for is key for retailers when it comes to effectively engaging with vapers around category education and advice and ultimately ensuring these valued potential customers choose to shop in independent stores, rather than online or in specialist vape shops."
Hogg says e-liquids represent the driving force of value sales within the vaping category, responsible for a 45% share of the market (£71m) and growing by an impressive 39% (Nielsen MAT). "However, ’closed’ systems (using interchangeable cartridges) still have a role to play, especially in terms of existing smokers moving into the category, as well as dualists," she adds. "Closed systems represent the second- largest market share with 29%, and UK sales worth £46m."
Hogg points to the impressive margins e-liquids offer. For example, blu 10ml e-liquid bottles offer margins of over 40% when sold at rrp, and says as such they present a key opportunity for independent retailers.
Hogg says that first and foremost, retailers should ensure they offer the optimal flavour portfolio for their customer base. "We recommend a wide range of flavours complemented by the right range of nicotine strengths.This will help retailers retain existing customers, attract new ones and foster their e-liquid sales revenues."
There are eight new flavours in the blu range, available in 10ml bottles in both 0% and 0.8% nicotine strength. They are: Tropic Tonic, Vanilla Creme, Peach Passion, Berry Swirl, Mint Chocolate and Green Apple. Caramel Café and Polar Mint are also available in a nicotine strength of 1.6%. Each 10ml bottle has an rrp of £4.99, and offers margins of over 40% when sold at rrp.
Meanwhile, Riot Squad launched in October 2016 and has quickly established itself as one of the UK’s leading e-liquid brands. "We have won a number of industry awards for our unique flavours and marketing," explains head of sales Matt Crann.
"Our product stands out on the shelf and is very recognised in the industry. We have recently launched into the UK’s largest night club operator in over 65 night clubs across the UK; this illustrates how far vaping has come in the past few years."
Crann continues: "Some devices in the vaping industry require the people selling them to provide advice and training on best practice. Forecourts won’t have the time or resource to do this effectively so should concentrate on e-liquids and easy-to-use pens and starter kits."
Brett Horth, CEO of Vapouriz, says the e-cig category continues to evolve. "There are not so many brands like Vapouriz coming on to the market, but there are many new brands of liquids launching every week. More and more retailers are understanding the category better and, as a result, more devices and more liquids are being stocked as individual retailers grow their e-cig inventory."
He says the Vapouriz brand is doing well but could always do better. He recommends forecourts stock Vapouriz FUSE, Vapouriz VPOD, Vapouriz Premium range e-liquids, Vapouriz 50/50 e-liquids and Double Drip e-liquids. Typical margins are 50-68% profit on return and the company can provide forecourts with high-impact counter display units and pos material.
Unlike traditional tobacco products, manufacturers can still display, advertise and promote vaping products in store. Hogg says blu has already distributed a number of guides across the independent trade, including advice on key market trends and changes in legislation. "In terms of in-store activations, we also offer a wide range of pos from shelf-edge strips and selling units to in-store sampling stations."
In addition, Hogg believes behind-the-counter solutions still have an important role to play in the sale of tobacco, accessories and moving forwards e-vapour products.
"They clearly, legally signpost that tobacco and e-vapour products are for sale, showcase a retailer’s wide range and availability of products, offer secure storage and in the case of Imperial-supplied gantries are provided and installed free-of-charge." She adds that having listened to retailer feedback, the company has developed hybrid furniture options, which combine traditional tobacco storage with attractive new sections intended to help highlight retailers’ e-vapour products, including the blu range.
Horth at Vapouriz says it’s important to stock brands that are well marketed and widely known by vapers. "Making the consumer aware the product is available is half the battle. "As a brand we ensure all of our stockists receive pos and merchandise to do just that."
Meanwhile, MultiVape, a founding member of the UKVIA (UK Vaping Industry Association), is working closely with its national network of retail partners to ensure that any pos promotions they run with MultiVape products both comply with regulations and deliver the sort of margin that retailers require to make them viable.
Christian Mulcahy, business development director at MultiVape, reports that the brand continues to grow. "It was 2016/17’s number one-selling e-cig in the convenience sector, according to Nielsen ScanTrack Impulse data. And because MultiVape is distributed exclusively by the DSL Group, the UK’s biggest forecourt promotions company, it continues to dominate the forecourt sector."
The company recently launched PHYX artisan e-liquids. In addition a next gen device, Sabre Nuvo, will be available soon. "With these launches we are bringing specialist products, which you’d normally have to go to a vape shop to purchase, to the forecourt sector and meeting demand for more accessible premium products," says Mulcahy.
Aikenhead Road Service Station, Glasgow:
"We stock Debang and Logik, both in display cabinets and on shelves behind the till. Most of our e-cig customers have given up cigarettes completely and switched to the electronic versions. They come in, knowing what they want so we don’t need to advise them.
"Debang are very popular as they are on a permanent offer of ’3 for £10’. Our regulars usually stick to the same flavours our most popular flavour is Strawberry Fields."
In the club
Vaping brand blu is currently selling and sampling its products in Ministry of Sound’s flagship London club.
The partnership will expose the brand to the 1,500 dance music enthusiasts who visit the club each night. They have the option to purchase the most popular blu device; the blu PRO which boasts advanced technology, innovative design and ultra-smooth taste, and choose from the full flavour and accessories range. Club-goers can purchase blu from bars indoor and out, and from the official merchandise shop.
The large outside terrace has been turned ’blu’ with bold branding, light projections and a blu light installation.
Be visible you can display, advertise and promote vaping products in-store. Countertop units are a great way to drive visibility in-store or, if space is limited, an impactful back wall display will do wonders helping to showcase your range.
Be knowledgeable make your store a destination outlet for vapers by being knowledgeable on the category, the consumer and the different products available.
Stock a variety of flavours e-liquids are the biggest driver of sales in the vaping category and an important area for retailers to get right. Pay attention to what your customers are buying and offer an extensive range of flavours and nicotine strengths that will appeal to both quitters and enjoyers.
Stay stocked up make sure you’re always fully stocked. If you don’t have a product in stock, customers may go elsewhere and not return. Stock at least one open system branded range and one closed system brand.
Don’t forget about clearomisers these offer a simple, effective way to up-sell and drive additional sales. Consumers should change their clearomiser after every two bottles of e-liquid, or with every change of flavour or brand to maximise their vaping experience.