Why Is Growth in the Vapor Segment Slowing?

Industry Insiders: Product Technology is Advancing, but Not Fast Enough

NATIONAL REPORT — Have you seen the ideal vapor product?

Many define it as one that can satisfy even the most habitual smoker, and they therefore believe it’s not on the market yet. But the industry is getting closer as vapor technology continues to evolve and staunch supporters continue their crusade.

From all corners of this quickly evolving market, the latest innovations have made leaps beyond first-generation initiatives, with the intent to elevate vapor perception and performance.
Wells Fargo Securities LLC recently reported that retailers remain excited about innovation, particularly second- and third-generation products that are now being launched in the market, which they believe could be a “catalyst for growth."

On the traditional electronic cigarette side, experts say the early models did not deliver enough nicotine to satisfy a smoker’s cravings. So this year, several companies ramped up their nicotine levels, such as blu eCigs and Altria’s MarkTen. NJOY uses a pharmaceutical ingredient in a new version of its device that it reports will increase vapor absorption in the lungs and elevate nicotine delivery to about 70 percent of a combustible cigarette.

R.J. Reynolds Vapor Co. completed national expansion for its Vuse Digital Vapor Cigarette, which aims be on a more advanced track to solve the vapor inconsistency found in basic e-cigs. Vuse uses a “vapor delivery processor” that communicates up to 2,000 times a second with a smart memory chip to monitor and regulate each puff, counting down the puffs. The product is intended to create “the perfect puff” every time, according to the company.

Longer battery life and increased vapor production are other improvements being made to existing products, including in the vaporizer realm. At the same time, many newer devices have the ability to control the temperature to minimize the generation of harmful or potentially harmful constituents (H/HPHCs).

Heat-not-burn sticks — slender, tube-like devices that give users as much nicotine as the real thing by heating, not burning, tobacco — are bringing even more attention to the Big Tobacco companies that make them. Namely, Philip Morris International and Reynolds American Inc. The main distinction between them and e-cigarettes, which use liquid nicotine, is that heat-not-burn devices contain real tobacco.

Still, according to a growing number of experts, despite all of this innovation and as advanced as it has become, it’s still not advanced enough.

The slowing of segment growth shows it. In the convenience channel, a recent Wells Fargo survey of 12,500 c-stores found that overall vapor category sales growth was a “solid” 8 percent in the first quarter of 2015, but decelerated compared to 17.4-percent growth in the fourth quarter of 2014. 

Reynolds American Inc. (RAI) President and CEO Susan Cameron has called it a “flattening in the space.” While she recognizes there has been continued growth of tanks, mods and liquids, and she sees a “dynamic” cig-alike market, she has made reference to customer dissatisfaction.

“There has been tremendous trial of vapor across cigarette smokers and the conversion has not been as high as we would like to see, yet there is continued use,” Cameron stated. “What that would say to us is that people aren’t finding the complete satisfaction, either from a convenience or from a satisfaction perspective in the vapor space as of today.”

Read the full article at csnews.com

"Why Is Growth in the Vapor Segment Slowing? Industry Insiders: Product Technology Is Advancing, but Not Fast Enough." Convenience Store News. Convenience Store News, 28 Sept. 2015. Web. 28 Sept. 2015. <http://www.csnews.com/product-categories/tobacco/why-growth-vapor-segment-slowing?cc=3#sthash.Giz2D5UU.dpuf>.

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