E-cigarettes: sales up in smoke with an £8m tumble

Just a couple of years ago e-cigarettes looked like it could be the Holy Grail for grocers, particularly indies, with its rapid growth and high margins. How times change.

Granted, volume sales are still up, but the extra 1.6 million units (5.7%) the grocery sector has shifted in the past year hardly meet the great expectations of many a few years ago. What’s more, value sales have tumbled 4.5%. That’s a loss of £7.7m.

There are a number of reasons for this. Stricter EU regulations around the amount of nicotine allowed and new rules on advertising have taken a toll, say experts, but the biggest factor is the rise of the high street vape store. The UK Vaping Industry Association says there are now more than 2,000 such stores across the UK, and counting.

“There’s no doubt that the emergence of national retail vape brands means grocery retailers are going to have to think more innovatively if they are to continue to have a decent slice of the market,” says UKVIA board member John Dunne.

Specialist vape stores have succeeded where the grocers are failing because the market has come a long way from the cigalike products that dominated sales a few years ago. The devices used by vapers have become increasingly elaborate and personal, as have the flavoured liquids they put in them. Specialist vape stores have evolved to offer wide ranges and experienced staff are on hand to offer advice.

All this is a far cry from the experience vapers get in the grocery retailers, says Dunne. “They will need to address the high costs they charge independent vaping companies to get their products listed,” he says. “They also need to overcome the perception that users get a better standard of product by going to a vape-only store. Finally they need to make more space for the category and, in particular, convenience stores need to look at how they use the gantry area effectively for promoting and selling vape products.”

These views chime with Sophie Hogg, head of Next Generation Products at Blu owner Imperial Tobacco. “Research conducted on behalf of Blu suggests the main reason consumers buy an e-vapour product has to do with their previous experience. Traditional retail channels rank below vape stores and online in terms of the level of consumer experience,” she says. “These figures highlight that ‘traditional’ channels have some catching up to do when it comes to offering vapers a positive customer experience. With significant margins to be made through sales of vaping products, it is in retailers’ interests to work with manufacturers to improve their knowledge and customer advocacy.”

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