You know the e-cigarette industry’s really come of age when the traditional tobacco companies get busy acquiring e-cig firms. So you have JTI with Zandera, which is responsible for E-Lites; Philip Morris International with Nicocigs, the firm behind Nicolites; and BAT with Nicoventures which produces Vype.
Meanwhile, Imperial Tobacco has bought the Blu brand while its subsidiary Fontem Ventures is supplying Boots with the Puritane brand. In a press statement Imperial declared that it was keen to "internationalise" Blu, which is the US leader in e-cigs.
There are hundreds of other brands available so the sector can seem a little confusing but Nigel Hardy, Nicoventures head of UK and Ireland, reckons retailers who choose not to get into the category may simply be handing trade to their competitors.
And there should be no doubt in your mind that the e-cigarette category is growing. A recent survey by YouGov estimated that usage of electronic cigarettes among adults in Britain has tripled over the past two years from an estimated 700,000 users in 2012 to 2.1 million in 2014. "Customers are pretty evenly divided between men and women and approximately 45% of the e-cigarette market is made up of rechargeable products," says Hardy.
He says the rate of purchase is dependent on individual ’vaping’ habits (for the uninitiated, those who use e-cigs are called ’vapers’): "But assuming first purchase is a starter kit, our research suggests vapers would be likely to buy a pack of four cartridges at least once a week."
"Smokers wanting to quit or cut down have definitely been the market for Truvape," says Lee Bryan, managing director at brand owner Sky Throne. "We deal with people from all walks of life, all ages both male and female who’ve managed to move from cigarettes to Truvape." Bryan says it’s especially lovely to hear from people in their 70s and 80s, who’ve smoked all their lives and thought they could never quit, but have finally managed to make the leap thanks to e-cigs.
"The frequency with which e-cigs are bought really depends on how much they smoked before switching," he says.
"A good rule of thumb is to say that a 10ml bottle of medium strength liquid will probably last an average ex-smoker about a week."
Michael Clapper, president international at Vapestick agrees. "Customers’ vaping habits denote how often they will buy their products, but as an example a vaper who smoked the equivalent of 30 cigarettes a day would approximately purchase one-to-two packs of Vapestick cartomisers per week." He adds that rechargeable e-cigarettes can be up to 70% cheaper than smoking the equivalent in tobacco cigarettes, while refillable e-cigarettes offer even greater savings.
When it comes to brands, there are plenty to choose from. Blu, for example,
is stocked in Euro Garages (170 sites) which carries its carts, disposables, Start, Premium, Pro Kit and liquids. In addition Mercury forecourts, Synergie Holdings and BP forecourts (330 locations) take the Blu Start, classic tobacco and menthol cartridges.
One brand that has very high hopes for good sales in the forecourt sector is Brio as it comes from the Clipper lighter firm.
Roseanne Vickers, marketing executive at Clipper, says: "As yet, no brand has been developed with strong recognition in the eyes of the consumer; but at last, Clipper has entered as a brand recognised by all smokers. Clipper, as a brand that’s thrived on its promise and delivery of reliable and quality lighters, has taken this approach to its new e-cigarette range to bring safe and dependable products to the market.
"We have only been selling Brio since late June and are currently in discussion with forecourts. However, bearing in mind Clipper lighters are listed with the likes of BP, Esso and Shell, I estimate we will have some forecourt business before the end of the year, starting supply in 2015."
Vickers says that while this year they have been concentrating on distribution, 2015 will be Brio’s year for consumer advertising. Clipper is also looking at developing point-of-sale material for retailers such as window stickers.
Apparently Brio’s USP is its vapflow system, which Vickers describes as "one of the most technologically advanced and reliable systems in the market". The hypersensitive airflow sensor detects when the user is taking a puff on the e-cigarette which helps make it one of the longest lasting e-cigarettes in the market, producing more puffs for the consumer’s money. And apparently the soft filter tip and smooth paper create an "enhanced realistic smoking experience".
Vickers says tank vaporisers (the tanks that hold the liquid) are fast becoming a fashion statement so they are important to have in your range.
"We have installed features such as a flexible non-leakage mouth piece and over-charge protection chip to ensure the safety of our users."
For its launch, Clipper is offering retailers a ’5+1 free’ promotion pack on its disposables and tank vaporisers
Brio’s range comprises: disposable in classic tobacco flavour gold, classic tobacco flavour bold and menthol; a rechargeable starter kit; cartridges/cartomisers in gold, bold and menthol; tank vaporiser; mini tank vaporiser; and e-liquids.
"From experience with our lighters we find retailers like to adopt the ’little and often’ system; meaning less risk and less investment," says Vickers. "We have therefore drawn on this experience and made sure our retail packs are small (packs of six) to avoid reluctance from the retailer to invest in a new product."
Vickers advises that forecourt retailers learn a few USPs about the product and promote them when selling to the consumer. "If they feel like you are trying to sell them the best and not just grabbing the nearest/cheapest product, this will build your relationship with them," she says.
Vivid from Nicocigs is available in a starter kit (rrp £19.99) as well as in 11 e-liquids in medium (11mg) and high (18mg) strengths (rrp £4.99) in the following flavours: classic tobacco, golden tobacco, menthol breeze, cinnamon apple, fruit fusion, pineapple rocks, apricot peach, red wings, citrus fruit, berry blast, cappuccino cream. Clearomisers retail at £4.99.
Meanwhile, Nicolites also from Nicocigs come in disposable 200 puff in classic tobacco and menthol flavours and high or low strengths (rrp £4.95) as well as in a disposable 400 puff version in the same flavours and strengths (rrp £6.95).
There’s a starter kit for £19.99 as well as packs of three cartomisers in tobacco, golden tobacco, menthol and cherry flavours in high, medium, low and zero nicotine strengths (rrp £6.95).
Also available is a spare battery (rrp £7.99); USB mains charger (£7.99) and electronic Cuban cigar (£14.99).
Under the Craze brand the firm offers flavoured e-shisha with zero nicotine in six flavours (rrp £6.99). Those flavours are: pineapple rocks, peachy keen, lemon zest, cinnamon apple, watermelon heaven and banana split.
The company says its most successful retailers are making £1,500 a week on Nicolites and Vivid sales alone.
And it says it is the only company to offer a full lifetime warranty on its starter kits. A spokesperson says: "We have recognised that disposables, in most cases, are the entry point for most electronic cigarette users and quite often this decision is price motivated so Nicolites now has the cheapest and smallest electronic cigarette on the market. The disposable 200 is the equivalent of approximately 20 cigarettes, which allows consumers to trial the product at a mere £4.95, considerably cheaper than a box of cigarettes and one of the cheapest disposables in the market."
Products are supported by a national marketing campaign which includes TV, radio and billboard advertising.
Sky Throne has enjoyed so much success in the past six months with its Truvape brand that it is bringing two new brands to market: Alchemy, specialising in high end, original e-liquid recipes; and Cloud Royal, a brand designed to bridge the gap between ’beginner’ and ’expert’ vapers.
Although Truvape is still available in a range of the first generation ’cig-a-like’ style electronic cigarettes for those customers who prefer them, Sky Throne managing director, Lee Bryan, says the market has moved on to the pen-style vapourisers with tanks that can be filled with the e-liquid flavour of the vaper’s choice.
The Tru Hybrid is the most popular electronic product in the Truvape portfolio.
Says Bryan: "Designed to appeal to a broad market, particularly those new to vaping, this is a high-performance personal vapouriser that uses the very latest third-generation technology, yet is in line with prices of the competition’s second-generation vapourisers."
This third-generation technology allows the user to change the coil head rather than changing the entire clearomiser unit, which Bryan says makes it very popular with consumers. "And, of course, retailers like the fact that this also leads to fewer returns and complaints to deal with."
The Tru Hybrid starter kit, which retails at £20, comprises a 650w lithium battery that comes with a six-month guarantee; a pro tank; a replaceable coil; and a USB charger.
Truvape’s e-liquids come in 28 different flavours typically fruit, mint and tobacco flavours. Bryan says there’s been a big move away from tobacco flavours in recent months, with the fruit flavours such as blueberry, cherry and strawberry all gaining in popularity. "Vanilla is also a good seller. Of the tobaccos, the golden tree, gold and silver and RY4 are pretty popular."
But the Alchemy e-liquids are the product to watch. "Launched in August at Vapefest 2014, they had a hugely positive reception, surprising even experienced vapers with their good, complex flavours including masala chai and English garden party. Consumers are always looking for the next new thing to try, and Alchemy is the brand to fulfil this need," says Bryan.
He describes margins as ’very generous’. "The Truvape start-up kit, for instance, will give the retailer 60 bottles of e-liquids, seven Tru Hybrids, 25 replacement coils and all the point of sale they might want, for just £150+VAT. This has a retail value of £455. Ongoing margins for Truvape tend to be around 60%, but this is flexible according to factors such as order size.
"We’ve found that good point of sale certainly makes a difference in terms of increasing sales, as does product positioning. That’s why one of our focuses has been on providing plenty of resources, including a counter-top display unit and posters. The Alchemy point of sale is something special a branded wine box with a specially designed stand to hold the box at a suitable angle for display. Everyone agrees that the bottles nestling in the straw look amazing."
Truvape sponsors events such as the Once Upon a Smile charity gala and the brand will soon be running its first TV advertising campaign through the Active channel, which pulls in over three million viewers. Advertising on terrestrial channels is expected to follow later in the year.
Vapestick says it offers a full range of products to cater for every step along a customer’s ’vaping journey’ from cig-a-like disposables such as the V2 (for first-time users), to rechargeable devices like the XL Starter Kit (with pre-filled cartomisers), through to refillable devices such as the Max Refillable Starter kit, for use with its V-Liquids.
"In order to become the destination choice for ongoing vaping supplies, it is essential that retailers offer as wide a range of flavours and strengths as possible, as vapers like to experiment and try different options as they continue along their vaping journey," says Michael Clapper.
He says all Vapestick products are easy to use with the disposable e-cigarettes sold ready-to-vape. "Our rechargeable e-cigarettes are made from two simple components: an XL or Max battery and a cartomiser customers simply screw their choice of cartomiser flavour/nicotine strength onto their XL or Max battery and recharge their battery as necessary via the provided USB charger.
"Our Max Refillable e-cigarette allows customers to easily fill the Vapestick Clearomiser, as instructed, with their choice of V-liquid and screw onto the Max battery for a powerful vaping experience, in a variety of flavours and nicotine strengths. Similarly our Max refillable e-cigarette is charged via USB charger supplied in the starter kit."
Margins range from 30%-50% depending on the product.
Vapestick is investing £12m in marketing this year with a campaign that includes heavyweight out-of-home activity as well as national radio advertising on First Radio, Talksport and Bauer radio stations, and digital display advertising. And the firm has just launched its latest sampling and experiential ’Vapestick Style Icon’ campaign, which is touring the UK, fronted by head judge Mischa Barton, who is searching for the UK’s most stylish Vaper. The prize is to star in the brand’s next advertising campaign and a shopping spree worth £2,000.
Meanwhile, retailers are supported with point-of-sale material, counter-display solutions and tailor-made promotional communication.
Last month saw Nicoventure’s Vype range refreshed with the addition of a new rechargeable product, Vype eStick. This has constant in-pack charging which means a fully charged case provides enough battery power to keep the e-cigarette going all day.
The eStick starter kit (rrp £19.99) contains one on-the-go charging case, one rechargeable e-cig battery, three eStick tips in blended tobacco flavour and one micro USB charging cable.
The brand refresh also sees the launch of its first flavour range.
Vype eStick tips are available in three flavours: blended tobacco; crisp mint; and dark cherry. Each eStick tip contains 12.5mg (3.5% v/v nicotine). There are four tips per pack, rrp £7.99.
"There is also no doubt that flavours are key to market development," says Nigel Hardy. "Irrespective of the format, tobacco flavour is a leader, with menthol coming second. Fruit flavours are also popular with cherry leading the pack."
Vype eStick will be supported principally with digital advertising but there is also a ’money back guarantee offer’ running until March 2015. This comes into play if a consumer is not 100% satisfied with their eStick starter kit.
All the manufacturers agree that the counter is the best place to merchandise e-cigs and their accessories.
Hardy says that way the retailer can make an advised sale, ensuring they are only selling to over 18s, and providing the customer with the reassurance that comes with real product knowledge.
Roseanne Vickers adds: "We would encourage retailers to place the displays on the counter at eye level to make the most of impulse purchase opportunities but that’s every brand’s ideal!
"We have therefore made our packaging eye catching with big header cards and the brand name in big letters to draw attention to the tobacco gantry, which is where they are likely to be kept."
Many forecourts and independents are now also dedicating space alongside their tobacco gantries, especially for e-cigarettes. Vapestick products have recently been added to gantries in all Shell UK forecourts.
An e-cigarette is a battery-powered often cigarette-shaped device that turns liquid nicotine into a vapour that the user or ’vaper’ inhales. There’s no ash and no smoky smell and e-cigarettes do not contain tobacco, carbon dioxide or tar.
E-cigs can come as one, two or three-piece products. The two-piece comprises a battery and cartomiser (a cartridge and atomiser); while the three piece has the cartridge and atomiser separate. A heating coil inside the atomiser heats the liquid nicotine, which becomes vapour and is then inhaled. The smoke produced is mostly water vapour.
Susie Patel, Wickhambrook Stores Newmarket
"We now have customers coming from over 10 miles away to buy Truvape. We only anticipated a small take-up on our initial purchase, however sales have grown week by week beyond our expectations. We have had great feedback from customers saying how useful it has been for them as a smoking preventative. We now have a wide range of the e-liquid flavours which customers all enjoy."
Simon Taylor, category manager, Welcome Break
"Stocking Vype has been a good move for Welcome Break," says category manager Simon Taylor. "With a Vype display on the back wall, we’ve been able to offer customers a wider choice which has been particularly popular with people on the move, and we’re looking forward to stocking the refreshed range. We ran a staff incentive recently which was very popular and we may well do more of the same with Vype."
The health question
There has been negative press about e-cigarettes but Lee Bryan, managing director at Sky Throne, puts this mainly down to the simple fact that these are new products using new technology and haven’t been around enough for there to be any ’long-term’ studies. "These are similar to news stories about mobile phones and cancer scares that were cropping up around 15-20 years ago," he says.
Just last month, the World Health Organisation called for a ban on the use of e-cigs indoors in public places and at work and said sales to children should stop. It also called for a ban on ads that might encourage non-smokers or children to use the devices.
Despite this, the vast majority of experts agree that e-cigs are much less harmful than the real thing. Professor Robert West from Cancer Research UK has said: "You are talking about potentially saving millions of lives a year a public health benefit we could hardly have dreamed of years ago".
"There will be constant speculation about this product until it becomes the law to provide test certificates," comments Brio’s Roseanne Vickers, "but I believe the general consensus is that anything has to be better than inhaling the 4,000 chemicals found in a normal tobacco cigarette!"
Michael Clapper at Vapestick says no sales should ever be made to under 18s, and retailers shouldn’t promote e-cigarettes as being ’quit smoking’ products.
"The best way to promote e-cigarettes is with the truth that they are "a cleaner alternative to tobacco smoking", that they are far less expensive and can be used almost anywhere. As long as you are careful to enforce the age restriction, and avoid making any health claims, there are no other current restrictions on e-cig promotion."