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The vapor category is still solid with tobacco
retailers—but with some new twists. As com-
petition heats up in the premium cigarette
segment with heightened promotional activi-
ty, the e-cigarette/vapor world is, by contrast,
thinner on hype—but still with a positive over-
arching sentiment, according to Wells Fargo
Securities’ latest Tobacco Talk retailer survey.
Representing roughly 25,000 U.S. retail loca-
tions, tobacco retailers and wholesaler con-
tacts voiced their opinions on a number of
industry topics in the second of quarter 2017.
Here are the key insights related to vapor
products and e-cigarettes:
Sales and sentiment in the vapor
category is improving.
This is thanks to the fact that innovation is
being driven by the top-tier players and also
that the uncertainty surrounding the U.S.
Food and Drug Administration’s (FDA) deem-
ing regulations is subsiding, according to Wells
Fargo research.
After strong growth in 2015, last year
showed declines and flat activity in the vapor
category. But it was up 6.9 percent in 2017’s
first quarter and 4.1 percent in the second
quarter, the research showed.
One retailer commented that his stores were
witnessing “strong sales” and, as a side note,
added that he hopes the “government stays
away from enforcing regulations.”
“I think the category has flattened out but
[is] still increasingly slowly,” reported another
surveyed retailer.
“It’s better but with [fewer] SKUs,” stated
another.
The category is favoring major
manufacturers; a narrower playing
field is expected to improve quality
and category management.
On the negative side, one retailer told Wells
Fargo that they were “looking to get out of
the e-liquid category,” and another indicat-
ed that they had “made changes late last year
to liquidate all products that are not from a
major tobacco company.” Others said “no
new brands,” and “not expanding to indepen-
dent companies, only Big Tobacco.”
On the positive side, one retailer who has
streamlined their business says, “The catego-
ry still shows significant growth. We continue
to keep inventory tight and make sure items
turn.” He adds that he is “getting rid of slow
sellers quickly.”
This is expected to contribute to improved
growth and management in the category for
the remainder of the year and moving forward.
Product quality is reportedly rising,
with Vuse and MarkTen increasingly
being named as the main contenders.
“The overall business is OK,” stated one
retailer. “Vuse is performing well, and the oth-
ers are a hit-and-miss.”
The way Wells Fargo analyzes it, retail-
ers remain bullish on Vuse and MarkTen
XL, while Logic is on the upswing given new
Vapor’s
Updated
Voice
When Wells Fargo
Securities released its
latest tobacco insights,
some of it was a pleasant
vapor surprise.
BY RENÉE M. COVINO
▲
2015
Q1 8.2% Q2 10.3% Q3 5.5% Q4 4.0%
BY THE
NUMBERS
ANNUAL
GROWTH OF
VAPOR
CATEGORY
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