Wells Fargo's Bonnie Herzog reports e-cig sales volume increases 40%, prices decline by 22% (since 2014)

[Bill Godshall]

Today, Bonnie Herzog reported that e-cig sales volume increased by 40.5% (during 4 weeks ending 3/21 compared to same period in 2014), that prices have declined by 22%, and that overall e-cig sales (in dollars) have increased by 9.6%.

Herzog also wrote: "Importantly, we note that VTMs are under-represented in Nielsen but are growing 3x faster than the vapor category based on our “Tobacco Talk” surveys."

The vapor product category that I call "PVs and e-liquids" Bonnie calls VTMs (short for vapors/tanks/mods).

This is very good news for the US vaping industry, as these increased sales of mostly cigalike e-cigs (largely due to Reynolds and Altria cigalikes) should further increase sales of PVs and e-liquid in the near future (as cigalike users switch to better and less expensive vapor products).

If anyone sees a news article about Herzog's new report, please post the weblink.

 

[Kent C]

CDC Ads Take Aim At E-Cigs - Convenience Store Decisions

“While we estimate the industry will continue to grow robustly in 2015 ( approximately 40% topline growth), reaching retail sales of $3.5 billion, we would be remiss if we didn’t acknowledge the increased uncertainty we have observed among investors, our retailer/industry contacts, and consumers over the past 6-12 months. We believe this unfortunate trend is being driven by: (1) mixed messages from the media; (2) lack of FDA regulation and need for leadership role; and (3) lack of vapor industry or public health alignment, which are in turn driving worsening public perception of the vapor category. This is exacerbated by the fact that it is difficult for the industry to defend itself or make any modified risk claims (that their products could be less harmful than combustible cigs),” Herzog said.

 

[Bill Godshall]

While Herzog's sales data is welcomed, the downside is that strongly supports the FDA deeming regulation (because it will financially benefit her and her favorite publicly traded Big Tobacco companies).

We believe this unfortunate trend is being driven by: (1) mixed messages from the media; (2) lack of FDA regulation and need for leadership role; and (3) lack of vapor industry or public health alignment, which are in turn driving worsening public perception of the vapor category. This is exacerbated by the fact that it is difficult for the industry to defend itself or make any modified risk claims (that their products could be less harmful than combustible cigs),” Herzog said.

Also, Herzog is wrong in claiming that "it is difficult for the industry to defend itself or make any modified risk claims", as its perfectly legal to make modified risk claims about e-cigs until FDA issues a Final Rule for the deeming regulation, and the only way that 99% of vapor product manufacturers can stay in business is if they expose, criticize and oppose FDA's proposal.

 

[Kent C]

While Herzog's sales data is welcomed, the downside is that strongly supports the FDA deeming regulation (because it will financially benefit her and her favorite publicly traded Big Tobacco companies).



Also, Herzog is wrong in claiming that "it is difficult for the industry to defend itself or make any modified risk claims", as its perfectly legal to make modified risk claims about e-cigs until FDA issues a Final Rule for the deeming regulation, and the only way that 99% of vapor product manufacturers can stay in business is if they expose, criticize and oppose FDA's proposal.

I tend to agree. I'd only point out that as an analyst, she is likely right with regards to her statement before the listing of 1,2,3.... "the increased uncertainty we have observed among investors, our retailer/industry contacts, and consumers over the past 6-12 months..." where either through survey or contact with those mentioned - she's explaining why those individuals have 'increased uncertainty', not necessarily her view of it (although that might be true as well, it's not stated as her personal view).

I know some investors like the 'uncertainty' - it moves the market, whereas for others, it's the uncertainty that keeps them out of the market.