It’s all change in the vaping market as the EUTPD II regulations come into force, meaning only compliant stock can be sold from May 20 onwards. Although this places a burden on forecourt retailers to ensure the products they sell are compliant, the regulations also bring an opportunity, as experts believe the market will change considerably. It’s likely there will be fewer products available, as smaller companies cannot afford the investment needed to ensure compliance. This in turn could lead to many vape shops closing and consumers having to get their products elsewhere.
Indeed, according to the 100K Campaign Survey, it is estimated that 84% of products currently on the market won’t be made EUTPD compliant and therefore won’t be available post-May 2017. This will mean that consumers will be unable to buy many of the products that they used to. It is also estimated that there will be a 56% reduction in the flavour types available post-May, as the cost of making each one compliant will be too high for many manufacturers.
Jennifer Roberts, UK category controller at blu, believes that the legislation, in the most part, is a very positive step forward for the category and should help to boost consumer confidence in the products. She also reckons these changes offer a significant opportunity for traditional retailers to grab these consumers and make them regular shoppers. "This will really be the first time that consumers will start to see things change in the market.
"With higher quality products in the market this should boost consumer confidence and encourage more smokers to give the category a try.
"In the long term, the new compliance regulations provide a very significant opportunity for the retail market, as consolidation will provide more consistent ranging and more widespread distribution that will provide more consistency for consumers. It will also mean consumers can enjoy a better-quality product offering in the market."
But first, you need to understand those EUTPD II regulations. November 20, 2016 was the cut-off date for production of non-compliant stock; any vaping products manufactured after that date have to be fully compliant. The most visible pointer to a product being compliant is new health warnings covering 30% of the front and back of all packs. Other changes include: liquid bottles must be a maximum of 10ml; cartridge refills and clearomisers can only hold up to a maximum of 2ml; liquids must be produced free of specific additives and be of high grade purity; nicotine strength is capped at 20mg/ml; and devices must give consistent doses and can’t boost nicotine release. In addition to the product changes, packaging is being changed to become tamper resistant and child proof.
From May 20, 2017 the sale of non-compliant stock is no longer allowed. You have up until this date to sell through any old stock, then it is your responsibility to ensure you aren’t selling products that don’t comply with the new rules.
Roberts says these new rules ensure that products are manufactured with high-quality ingredients and technically meet certain requirements.
To help retailers prepare for the deadline, blu has launched its ’next generation’ of EUTPD II compliant vaping products. The new range includes the blu PRO Kit, Clearomiser and e-liquids. Roberts says that as well as being fully compliant with the new legislation, the technology for the blu PRO Kit has also been upgraded to provide a better experience for consumers.
JTI is extending its e-cigarette range with the introduction of Logic LQD, a new open tank device and range of e-liquids. Features include an advanced refilling system that guarantees easy and precise e-liquid delivery. An innovative dual-coil and variable voltage control also offers an enhanced and customisable vaping experience for users.
Logic LQD’s UK-made e-liquids feature a three-step child-resistant bottle mechanism with a precision nozzle to prevent spillage. They are available in six flavours (Tobacco, Menthol, Cherry, Vanilla, Berry Mint and Strawberry) and a variety of strengths with an rrp of £5 per 10ml bottle. Following the launch of the e-liquids, the Logic LQD device (rrp £20) and the Logic LQD Atomisers a required accessory for open-tank devices that will typically need replacing every two-to-four weeks (rrp £9 for a pack of three) will become available.
Meanwhile, JTI’s Logic PRO is the UK’s fastest-growing closed-tank product (Nielsen data) and already has a 19% value share of the closed tank segment. It is said to deliver a ’no spill, no fuss’ experience that is backed by the full support of a mainstream supplier ie JTI. The company says features including a five-click lock/unlock facility, long-lasting battery with quick charge, sleek design and no maintenance required, differentiate Logic PRO from other products available within the category. JTI is adding new Berry Mint and Strawberry flavours to its range of Logic PRO capsules.
According to Nielsen data, the vaping market is booming with a retail sales value of £168m and growth of 18%. However, this figure doesn’t include sales through vape shops and online so the total market is even larger. Sales through the impulse channel are worth £69m, with growth of 15% year-on-year.
Roberts says that while it’s difficult to place an exact figure on the total size of the vaping market, a recent ASH report stated that there are now over 2.8m vapers in the UK, which equals an increase of 300% since 2012. "With market figures reporting year-on-year increases across the board, and with consumers spending on average £1,000 each per year, the vaping market is only getting bigger and all retailers, if they’re not already, should be prepped to take advantage of this flourishing category." She adds that blu has a 13.2% value share of that £168m figure.
The trend towards open (or tank) systems and e-liquids is continuing, with open systems now accounting for 44% of the total market. A combination of value-for-money, better delivery, as well as more flavours and strengths, are all contributing to this trend. Open systems are particularly ideal for heavy smokers, as they give the bigger nicotine hit that they are used to and present greater value for money. But despite this developing trend, Roberts recommends that retailers stock a range of vaping products, including closed systems such as blu PLUS+ for light smokers, as well as open systems such as the blu PRO Kit.
One of the many reasons for vaping products’ success is their value for money. With the price of conventional cigarettes and other tobacco-related products going up year-on-year, vaping products present a much more affordable option for existing smokers. In the UK, the average vaper spends about £2 on vaping-related products on a daily basis, versus a £5 spend on cigarettes, which highlights the savings on offer for smokers by simply switching to vaping products.
Says Roberts: "For retailers, tobacco sales may be significant at present but the profit margins are minimal. On the flip side, vaping product sales may be small, but the margins available are significant. With the value and size of the category growing in popularity, as more and more smokers look to switch to vaping products, this is an opportunity that shouldn’t be missed."
She adds that public endorsement and awareness of the potential benefits of vaping products versus cigarettes is also helping the category grow. "There is still a long way to go in terms of category education but this increased show of support for vaping products from independent bodies is giving consumers greater reassurance and in turn, encouraging others to buy into the category."
Roberts advises forecourt retailers to start talking to their customers now about the changes that are coming and to ensure they’re selling the latest technology that will still be available after the May deadline.
"As this is a key time of year for smokers to consider giving up, make sure you’re offering them the right product for their smoking needs ie open systems for heavy smokers or closed systems for light smokers."
Another ’plus’ for the vaping market is that unlike tobacco, products don’t have to be hidden away so your range should be made as visible as possible.
"If you have space for a small unit on the counter top, we strongly recommend using this to increase awareness and draw the attention of customers to your vaping product range. Otherwise, we recommend dedicating space on the back wall to display your whole range together," says Roberts.
Bigger clouds, fuller flavours
You may have noticed that some people, when they’re vaping, create big clouds of smoke while others don’t. That’s because the people creating the big clouds are using sub-ohm liquids.
Rob Newton, head of sales at Debangstix, explains: "Sub-ohm devices have an atomiser with a resistance of less than one ohm, hence the name ’Sub-Ohm’. The bigger cloud element is provided by increasing the quantity of vegetable glycerin (VG) in the liquid, therefore sub-ohm liquids tend to contain 60% VG or more. And due to the high power of sub-ohm devices the vapour produced is also warmer, giving a better user experience."
Newton says most sub-ohm vapers aren’t smokers so aren’t looking for a big nicotine hit so most sub-ohm ’juices’ have either no nicotine or just 3-6mg in them. Instead, he says, sub-ohm vapers are looking for ’moreish’ dessert flavours. Debangstix offers these in its new Classic Dessert and American Diner flavour liquids which include Dazzling Donuts, Strawberry Mojito and Lemon Drizzle Cake flavours. They are available to forecourt retailers from Convenience Distribution Group in a pre-filled stand, currently on a special deal.
Newton says Debang’s products have been sent out to specialist vaping bloggers and vloggers, and have received rave reviews.
Currently most sub-ohm vapers go to vape shops but Newton believes there is a big opportunity for forecourt retailers to sell these products. "Our pricing has been created with forecourt convenience stores in mind to give them a competitive edge. Our liquids are ’3 for £10’ or just £3.99 each where most vape stores sell similar or the same liquids for up to £10 or more each." And he says they are good for repeat purchases as most sub-ohmers tend to use far greater quantities of eliquid as more of the juice is turned into a thick cloud and therefore evaporates quicker.
Top tips for vaping success
Sell through any non-compliant stock in preparation for the EUTPD II regulations coming into force in May.
Don’t bulk-buy ’special deals’. Brands that won’t be compliant with EUTPD II may offer some impressive deals in order to shift their stock. If you buy them you may end up being left with stock that you won’t be able to sell under the new regulations.
Stock the right brands to drive sales. blu is the number one e-liquid and liquid kit brand and the number two vaping brand overall. Almost 30% of consumers said they would choose to shop elsewhere if their first choice of vaping brand was not available in-store. So make sure you’re stocking two or three of the top four brands in the convenience channel (blu, E-Lites, Vivid, and MV) as these four account for over 58% of convenience channel retail sales.
Stock a variety of products to cover all vaping needs. As a minimum, you should be stocking one or two open systems for experienced vapers, or those looking for a bigger throat hit, a tobacco liquid and flavoured liquid at different strengths and, if space allows, one closed system kit.
Be visible four out of five vapers are dual users, using both vaping products and traditional cigarettes, and prefer to see vaping products near tobacco products.
Offer promotions. Don’t forget, there are a lot of ways to promote vaping products in your store. You can actively display vaping products and accessories or advertise them via posters and POS, but you can also offer promotions such as ’two liquids for £8’ or ’buy two liquids and get a clearomiser half price’.
Know your vaping products. Take time to familiarise yourself with the different products on offer so you can be knowledgeable when speaking to customers. Talk to your customers and guide them through your product offering to find the best vaping solution for them. By doing so, your shoppers will be happier to come back to you.