As I attend events such as the Tobacco Category Review Meeting [CSP—Aug. ’14, p. 97], Outlook Leadership and the first Vaping Academy (p. 113), I often find myself surprised at how high vape-shop competition ranks on the list of retailer concerns.
Are vape shops stealing c-store business? Can the convenience channel ever hope to compete with the vaping-centric knowledge and offerings of this new channel? Is this channel here to stay, perhaps the tobacconist of the new segment—or will it fizzle out in the face of stricter regulations?
Also prominent are questions about manufacturers: Does the entrance of Big Tobacco into the space represent a good thing—or the death of a competitive market? Are smaller players improving the industry—or blackening the segment through subpar manufacturing standards?
I don’t pretend to be a retailer. But as I listen to these concerns, I’m reminded of my “brewery brat” upbringing.
As in the world of tobacco, there are a couple of manufacturers (i.e., “big beer”) representing the majority of the sales. Also akin to vapor, there has been a recent explosion of “small beer” enthusiasts: people who will go miles out of their way to frequent a specialty beer retailer that has shelved a few bottles from their favorite brewer; people who will make a reservation months in advance and dish out hundreds of dollars to enjoy the only high-end beer-pairing dinner in New York at Brooklyn’s 26-seat Luksus eatery; and people who will road trip to stay at the country’s first brewery-themed hotel, the Dogfish Head Inn in Lewes, Del.
(Confession: Despite my “big beer” roots, I am a full-fledged member of the small-beer-enthusiast club—so much so that I’ve joined the uber-small-beer movement of home brewing.)
For all the passion we enthusiasts have, this very small percentage of the population is hardly a threat to major manufacturers or traditional retail channels. In both beer and vape, there is a wide variety of consumers. Yes, there’s a niche segment that is drawn to higher-priced, smaller-batch options, but the majority of consumers would prefer mainstream products sold by mainstream retailers.
The difference is that the beer world is not facing regulations that could potentially wipe out the entire industry, big players and small. Vape is going up against people consultant Clive Bates describes as “bureaucratic politicians” and “public health’s useful idiots” making a lot of noise about how e-vapor will trick kindergartners into a lifetime of addiction.
Though these claims are certainly not anchored in science, the voices are proving to be quite effective in shaping how the public views electronic cigarettes and vaping.
“The truly awful thing is not only do people not understand reduced risk, but their understanding is going in the wrong direction,” Bates said at a recent Wells Fargo event. “The number of people in the United States who think e-cigarettes are less harmful than combustibles is declining.”
Perhaps even more troubling, more states and local legislatures are restricting or attempting to ban vaping products, from New York proposing a ban on all flavored vaping products to 11 states attempting to enact e-cig taxes in 2014—many following Minnesota’s model of applying a 95% OTP tax to vaping products.
“Minnesota’s current 95% tax on e-cigarettes is exorbitant and has resulted in retailers not selling a significant number of e-cigarettes,” says NATO executive director (and Minnesota resident) Thomas A. Briant. “Moreover, assessing a high tobacco-products tax rate on e-cigarettes could discourage adults from transitioning from combustible cigarettes to e-cigarettes.”
Like I said, I’m not a retailer. But I have to think the possibility of regulators wiping out this game-changing segment entirely represents a much bigger threat than vape-shop competition. After all, if products are banned or so strictly regulated that there’s no room for the innovation needed for this segment to grow, the competition of vape shops is a moot point.
I have to think Bates’ bureaucratic politicians and useful idiots must get a kick out of vaping manufacturers and retailers fighting among ourselves rather than focusing on the real threat at hand. For the time being, isn’t it better to work together to ensure our mutual survival?
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