Management Science Associates Inc.

Electronic Vapor Trends

  • The electronic nicotine delivery category is continuously evolving and now includes both cig-a-likes and liquids/vapors/mods products
  • Measuring wholesale shipments to retail outlets, the majority of e-Vapor volume is sold through convenience stores, followed by tobacco outlets
  • Since Q4 2013, liquids have been gaining some traction, accounting for at least 10% of total e-vapor volume in recent periods
  • Through Q1 2014, the distribution of e-Vapor products increased to 42% of all retail outlets versus 30% year-ago
    • 62% of c-stores and 74% of tobacco outlets sell at least one e-Vapor product
    • Tobacco outlets have deeper penetration by product type than c-stores
  • There is jockeying for leading brand position by both major and smaller tobacco manufacturers to capture adult consumers’ initial interest and continued loyalty to their brands
  • Convenience retailers can grow e-Vapor volume by stocking these top selling products, as well as considering newer entrants with attributes that would have high appeal to adult consumers in this changing and expanding category

Click here to view the MSA study of wholesale shipments by channel, types and brands.

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e-Vapor Trends
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Click to view cciPanel shopper insights

The Convenience Consumer Insights Panel (cciPanel), a first-of-its-kind mobile research panel from Management Science Associates and Paradigm Sample, was designed to capture purchase-decision and attitudinal information among convenience store shoppers, including the millennial segment most likely to shop the channel.

cciPanel examined the recent market baskets among 18+ year old shoppers between April and September, 2012. Among 5,000 recent trips to convenience stores, 78% trips were made to chain stores, 17% to non-chain stores and 5% were unsure of store type.

Some shopper insights from these non-chain convenience store visits:

  • Visitors to convenience stores have varied missions; some routinely visit to buy tobacco and lottery tickets, while others make last-minute stops for beverages, gas and on-the-go immediate consumption snacks.
  •  Retailers should employ tactics, such as using social media and prominently displaying signage at the gas pumps, to drive traffic into their stores to build a loyal customer base and attract new customers
  • Differentiate your store and product assortment and provide superior customer service so that you become their preferred C-store.
  • Reward your regular customers with promotional offers to increase their trips to your store and dollars per trip

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C-store Shopper Behavior
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Click to view E-cig presentation

The electronic cigarettes category is growing rapidly, with industry experts projecting $1.7B category sales at retail in 2013.  There will be jockeying for market leadership position among the earlier entrants such as Lorillard’s blu and NJOY; the more recent entrants from the remaining Big Tobacco manufacturers, Reynolds American’s Vuse and  Altria’s MarkTen; and among smaller, entrepreneurial manufacturers.  According to independent store level data from Management Science Associates, the top 7 brands account for over 80% of e-Cig equivalent unit volume, with Lorillard’s blu dominating with 45 share based on year-to-date volume through August 2013.

However, the size and market leaders of this innovative category could be influenced by any of the following factors:

  • Food and Drug Administration’s (FDA) Center for Tobacco Products possible regulation of this innovative category. Regulation could place limits on:
    • flavors, variety or strengths
    • online sales
    • minimum legal age to purchase
    • standards for television, radio and print advertising
  • Potential for increased taxation at the state and local level
  • Possible local ordinances restricting consumer usage in public
  • Consumer perceptions:
    • acceptance or rejection around the safety of electronic cigarettes versus traditional tobacco
    • acceptance or rejection of electronic cigarettes as a device to reduce usage of traditional cigarettes
  • Consumer awareness, trial and long-term category acceptance, as indicated by high depth of repeat, as a complementary or replacement product to traditional tobacco and/or as an alternative smoking reduction/cessation product

The manufacturers who are best able to navigate through these market influences and deliver the products that satisfy consumers’ needs will have the greatest potential to benefit from this emergent category.

View E-cig statistics

Electronic Cigarette Trends
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