Bonnie Herzog's new survey finds most convenience stores plan to sell premium vaporizers

[Bill Godshall]

Below is the executive summary from Bonnie Herzog's new survey of the US e-cig market, with my highlights in blue.

We recently conducted a survey of our tobacco retailer and wholesaler contacts representing 30,000+ convenience stores in the U.S. Our goal was to better understand the vapor/tanks/mods (VTM) sub-segment of the broader vapor category, particularly as these products, such as personal vaporizers, further infiltrate c-store shelves. Overall retailers continue to be excited about VTMs with more than 92% believing VTMs are taking share from e-cigs - "Value and satisfaction is driving the change. Vapes deliver what the smoker is looking for." Other key takeaways from our survey include: (1) Nearly all (95%) either currently carry VTMs or expect to carry them in the next 6 months; (2) blu and NJOY are expected lose share to Vuse and MarkTen as they roll out nationwide over the next few months; and (3) VTMs offer attractive margins for retailers (~30% which is more than double average cig margins) though retailers are concerned about margin compression if/when the Big 3 control the vapor category. Given retailers' excitement around VTMs, these products are expected to comprise 45% of the vapor category in c-stores in 6 months, up from 26% today.


Although I question Herzog's market share estimates (as nobody really knows), the market share of the premium vaporizer/e-liquid segment (called VTM by Herzog) of the e-cig industry continues to grow at the expense of the cigalike market segment, and the vast majority of convenience stores are planning to sell premium vaporizers (and presumably e-liquid) in the next six months.

This is likely to increase competition for Vape Shops and Internet vendors, and create havoc for the FDA, which still plans to ban all e-liquid products, and approve just several cigalike brands.

 

[rothenbj]

One of the many reasons the FDA has to get their fists slapping down the good part of the market, that not controlled by BT.

 

[stevegmu]

Clearly these vendors and suppliers don't believe the FDA plans to ban all e-liquid... What do they know, it's just their business...

 

[Gato del Jugo]

...the market share of the premium vaporizer/e-liquid segment (called VTM by Herzog) of the e-cig industry continues to grow at the expense of the cigalike market segment...

I'd argue that it's also growing at the expense of the combustible tobacco segment..

These days, apparently smokers are skipping over the cigalikes & going straight to the eGo's & what-not...

 

[Gato del Jugo]

Clearly these vendors and suppliers don't believe the FDA plans to ban all e-liquid... What do they know, it's just their business...

Businesses will sell whatever is selling...


(Sounds sort of like Yogi Berra.. )

 

[AgentAnia]

I'm not surprised. Even my little no-name gas station across the street is selling basic eGo-clearo starter kits and eliquid. Though they are off-brand, it's a start.

 

[Bill Godshall]

stevegmu wrote:

Clearly these vendors and suppliers don't believe the FDA plans to ban all e-liquid...

I'm not aware of any evidence indicating that statment is a correct (or even close).

What most folks in the e-cig and tobacco industry's do know is that FDA's proposed regulation (that would ban >99% of e-cigs) won't go into effect until 2 years after the FDA issues a Final Rule for its proposed Deeming Regulation, and that the Final Rule is not likely to be issued for another 2 years. As such, the FDA's proposed ban on all unapproved e-cig products probably won't take effect for at least 4 more years (i.e. 2018).

Most retailers plan for the next quarter, and there will be 16 more quarters in the next 4 years, during which lots of e-cig products will be sold. I don't expect retailers to stop selling e-cigs until FDA begins issuing cease and desist letters informing them that the products are banned.