A man pulls out a pack for his end-of-the-night smoke, then exhales a hazy cloud from that first drag. From across a dimly lit, crowded bar, you’d swear that the product he holds—with its compact size, soft tan filter, white body and distinctive orange glowing tip—was a cigarette.
Such was the ideal not long ago for electronic cigarettes. If it looked like a cigarette and felt like a cigarette, it might very well be the ideal e-cigarette.
Now, with cities passing laws banning indoor e-cig usage because the products look so much like tobacco cigarettes, being described as looking like a cigarette (or “cig-alike”) may be a detriment.
Running the gamut from blu’s sleek black body and titular blue tip to massive tank units, products that are moving away from looking like their cigarette predecessors is a phenomenon observed by Nik Modi, tobacco analyst for New York-based RBC Capital Markets.
“We’re seeing much more novelty looks vs. the traditional cigarette-e-cigarette look,” Modi says. “I definitely think the trend is moving towards noncigarette-looking products.”
It’s not just manufacturers moving away from the “cig-alike” model. Though quality and performance remain the top drivers, an e-cig’s appearance is increasingly important to consumers, especially as more communities restrict the use of combustible cigarettes.
“Adult smokers have already provided evidence that they want an alternative that acts like a cigarette vs. something that just looks like one,” agrees Jason Healy, president of Lorillard’s Charlotte, N.C.- based blu eCigs.
There are still plenty of high-performing cigarette-looking models: Scottsdale, Ariz.-based NJOY has long been an industry leader, and established tobacco companies such as Richmond, Va.-based Altria and Jacksonville, Fla.- based Swisher International made the conscious decision to have their proprietary e-cig entries look like cigarettes. (Altria’s Green Smoke acquisition also falls into the “cig-alike” category.)
Which begs the question: Which model will win out in the long run?
A Case for the Familiar
Looking (and working) like a combustible cigarette initially was very important, not just to “cig-alike” products but also to the electronic cigarette industry as a whole, especially when early heavier, larger and expensive models failed to take off.
“When e-cigs were first introduced to the U.S. market, the initial response by consumers was a total rejection for anything that didn’t look like a cigarette,” says Carlos Bengoa, president of CB Distributors Inc., Beloit, Wis. “The majority of smokers found the product too big and had a hard time adjusting to the weight.”
As such, companies introduced quality products—such as CB Distributors’ 21st Century Smoke and NJOY’s Kings—that mimicked the weight, look and feel of tobacco cigarettes.
“We’ve made a conscious choice to look like a tobacco cigarette,” NJOY’s CEO Craig Weiss said during the Wells Fargo E-Cig Forum last November. “Our view was the more familiar you make the product, the more likely people are to make the switch.” (NJOY declined comment for this story.)
It’s a move that seems to have worked: Global e-cig sales have grown by an estimated 30% each year since 2010, with U.S. sales more than doubling from 2012 to 2013. Bengoa credits this to a quality offering of cigarette-like options.
And though improvements in technology and performance have definitely bolstered the e-cig boom, many manufacturers still believe a familiar appearance eases the transition for adult smokers. Ed Denk, Swisher’s director of marketing, says that’s exactly why his company opted for a cigarette-like model when launching e-Swishers in 2012.
“We have heard overwhelmingly that the current cigarette consumer who is considering e-cigarette use is looking for the same look, feel and taste as their cigarette,” he says. “Almost none of the smokers we have talked to [were] open to a noncigarette looking device initially in their e-cigarette experience.”
Even Miguel Martin, president of the non-cigarette-looking e-cig producer Logic Technologies Inc., Pompano Beach, Fla., agrees that familiarity is important to some consumers, acknowledging “there might be a percentage of people who, at the very beginning of the process, need something that’s identical to ease the transition.”
However, consumers no longer have to choose between larger models and products that look just like a tobacco cigarette. Offerings such as Logic, blu and Reynold’s Vuse give consumers a third option: an electronic cigarette with a weight and size smokers are used to, but a design that clearly distinguishes it from a combustible product.
Or, as Winston-Salem’s R.J. Reynolds Vapor Corp. spokesperson Richard Smith puts it, “as different as possible yet as familiar as necessary.”
Familiarly Different
Just as NJOY and Swisher decided to mirror the look and feel of tobacco cigarettes, early adopters of this “non-cig-alike” option worked to design something different.
“It was a conscious choice to offer a product that clearly was not mistaken for a traditional cigarette when in use,” says blu’s Healy. “This is intended to invoke curiosity rather than to suggest that it is a combustible cigarette.”
Many of these manufacturers believe a different kind of design also reflects the true nature of these products. “These are not the same cigarettes that have been around for 70 years,” says Martin. “At the core, these are technology products.”
This concept was central to Reynold’s Vuse design. From the outset, says Smith, the company sought a futuristic appearance. “Form and aesthetics are inherently relevant for high-tech consumer products, and especially with tobacco products, given the hands-on, close interaction with the product,” he says. “We designed the look of Vuse to reflect the forward-thinking nature of the product.”
Though this makes sense, it’s important to note that when blu and Logic introduced their products in 2009 and 2010, the market was filled with cigarette-looking products, which were performing well compared to earlier “non-cig-alike” models.
However, retailers such as Anne Flint of Cumberland Farms aren’t sure that it was the familiar appearance that drove the success of these products, or that they were the only lightweight and disposable options for a couple of years.
“At the beginning, adult consumers did not have a choice,” says Flint, senior tobacco category manager for the Framingham, Mass.-based retailer. “Now, with the advent of Logic and blu, consumers have that choice and are increasingly choosing those items.”
The latest Nielsen numbers seem to demonstrate a preference towards noncigarette-looking options: blu and Logic were the top performers in c-store dollar and unit sales as of Feb. 15, 2014, with blu leading the pack with a 43.9% dollar share and a 33.8% unit share.
While blu has reigned supreme in the years since its acquisition by Lorillard, the independently run Logic recently knocked the once top-seated NJOY down to the No. 3 slot, though the two remain very close. Logic has outsold NJOY in terms of unit share since October (with a 21.8% February share) and reclaimed the No. 2 spot in dollar share (20.2% in February) after going back and forth with NJOY since December 2013.
While cost, battery life and overall quality likely play a role in this shift, Martin says, “I don’t think it should be lost on anyone that (at least) two-thirds of today’s e-cig sales are ‘non-cig-alike’ products.”
In fact, Vuse, which is available only in Colorado and Utah for now, was the sixth best-selling e-cig product in those states, according to Nielsen, with a respective 2.5% and 1.6% unit and dollar share.
“I would hazard a guess that [non-cigarette-looking products] are a good 70% of the market, and growing,” Martin says. “It says a lot about the consumer.”
Sending a Message
Tobacco analyst Modi agrees that the shift away from “cig-alikes” says quite a bit, especially because he believes appearance is the primary difference between these options.
“The difference really comes down to word of mouth,” he says. “If you’re smoking something that doesn’t look like a cigarette, it intrigues people; if you’re smoking an e-cig that looks like a cigarette, people start to question what you’re doing. It’s a very small, reactional difference, but one that’s very powerful.”
Healy of blu says, “When consumers use a blu e-cig, people immediately know that it is different and want to know more about the product rather than immediately condemn it.”
This distinction becomes even more important to consumers who live in the growing number of areas that have banned smoking from restaurants, bars, parks, workplaces and more.
“As more towns in our trading area enact legislation, we hear that products that do not look like a cigarette are increasingly popular,” Flint says. “This allows the adult consumer to definitely demonstrate they are not smoking.”
But it’s no longer just combustible cigarettes that are subject to a legal stigma: Many lawmakers have successfully banned e-cigs in spaces where smoking has been prohibited, based on the argument that it’s too difficult to differentiate between vaping and smoking.
“Because e-cigarettes are designed to look like cigarettes, they pose a problem to business owners and threaten effective enforcement of the Smoke-Free Air Act,” said New York City Council Member James Gennaro, Speaker Christine Quinn and Health Chair Maria del Carmen Arroyo in a December statement that supports adding e-cigarettes to the city’s Smoke-Free Air Act.
Despite strong opposition from multiple bar and restaurant representatives who testified that, cigarette-looking or not, they had no problem distinguishing e-cigarettes from combustible products, the New York City Council voted 43-8 in approval of the e-cig ban. Not long after, Chicago and Los Angeles followed suit, with other cities and states now considering similar measures.
Not surprisingly, few e-cig manufacturers agree with such actions—pointing out that if confusion were really the issue, only cigarette-looking products should have been banned. But some say that “confusion” gives regulators a rationale behind their e-cig restrictions.
“I don’t agree with it, but the reality is some of these federal and state regulators will use any excuse to try and stop the electronic-cigarette industry,” Modi says. “The last thing you want to do is convey the message of re-socializing smoking.”
Form vs. Function
Because of ongoing regulatory attacks, many consumers prefer clear-cut vaping products. But ultimately, how important is appearance if the performance isn’t acceptable? “While design is important to our adult consumers, product attributes such as battery life and pack equivalents have been particularly important to their purchasing decisions,” Flint says.
Modi believes most traditional electronic cigarettes on the market function the same, regardless of their outward appearance. But Martin counters that not strictly mirroring the size and weight of tobacco cigarettes allows companies such as Logic to make subtle, yet important, improvements to the technology.
“It’s not just the styling of it, but the physics of having a product that’s smaller in size,” he says, explaining that cigarette-sized electronic cigarettes are not large enough to accommodate an adequately sized lithium battery to ensure longer puff counts.
An improvement in quality has also played a role in the recent increase in personal- vaporizer sales. However, Bengoa of CB Distributors doesn’t necessarily see this shift as a movement away from “cig-alike” products but as part of an organic evolution resulting from more consumers entering and becoming familiar with the category.
As such, CB Distributors continues to offer its cigarette-like 21st Century Smoke but also has introduced the Vapin vaporizer. Bengoa sees a market for both products.
“This is a continuously evolving business; now the trend is changing again,” he says. “Consumers realize the vaping experience is much closer to a traditional cigarette, not in appearance but in the actual experience.”
Modi agrees: “Maybe consumers aren’t looking for the same experience; they’re just looking for the same behavior. Maybe different forms are more compelling, which is why you’re seeing some of the [vaporizer] units perform much better.”
But what does this latest evolution mean for the once-dominant “cig-alike”? Denk of Swisher still believes the majority of electronic-cigarette consumers would prefer a format combining the quality of tanks with a familiar appearance. “Our goal with Swisher e-cigarettes is to provide the experience they are looking for without having to sacrifice on look and feel,” he says.
Others say the “cig-alike” is dead, or at least dying. “Consumers are indicating that merely being ‘cig-alike’ is not enough,” says Martin. “People have gravitated toward the puff count and amount of vapor; it’s very difficult to make that work with a smaller, cigarette-sized frame. With increasing regulations and an interest in demonstrating that they are not smoking, non-cigarette-styled products are gaining popularity.”
With NJOY a force in the marketplace and power player Altria backing not one but two cigarette-looking e-cigarettes, it may be a little premature to place “cig-alikes” on the endangered-species list. The current numbers may suggest consumers are shifting toward non-cigarette options; however, consumer preferences on appearance already have shifted more than once in the short history of the segment.
Perhaps, in this constantly evolving marketplace, retailers and manufacturers need to keep a close eye on what consumers prefer, from taste to looks. “More than anything, the winners in this industry will be those who understand the consumer,” Healy says, “both how they use the product today and in the long term.”
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