The vapor category is still solid with tobacco retailers—but with some new twists. As competition heats up in the premium cigarette segment with heightened promotional activity, the e-cigarette/vapor world is, by contrast, thinner on hype—but still with a positive overarching sentiment, according to Wells Fargo Securities’ latest Tobacco Talk retailer survey.
Representing roughly 25,000 U.S. retail locations, tobacco retailers and wholesaler contacts 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) deeming 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 indicated 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 independent companies, only Big Tobacco.”
On the positive side, one retailer who has streamlined their business says, “The category 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 others are a hit-and-miss.”
