PHOENIX -- Vape. It's not your father's tobacco product, as reflected by CSP's first-ever vaping-centric meeting hosted last December in Phoenix: from a marquee sponsor whose mission is to "make cigarettes obsolete" to a trendy vaping party complete with fog machines, it was not your typical tobacco meeting.
For all the excitement over Oxford's word of the year, many convenience store operators are understandably leery of this atypical tobacco segment. More tech product than tobacco, filled with a vocabulary all its own (does anyone really know the difference between a tank and a mod?), and with vaping-centric lounges taking the country by storm, vaping products have left some in the c-store channel wondering if it's a segment really worth investing in.
Representatives from Ballantyne Brands, CB Distributors Inc. Kretek and NJOY cautioned against this line of thinking during the Vaping Academy's marquee sponsor panel.
"Why get into vape?" asked Vito Maurici, senior vice president of sales for the Scottsdale, Ariz.-based NJOY. "Because the consumers are taking you there."
"It goes back to the first word of the channel: convenience," added Ron Vogler, senior vice president of business development at Kretek International, Moorpark, Calif. "70% of tobacco sales are through convenience; it would be foolish to not even try to compete in that arena and just concede without giving it a shot."
During the panel, Maurici, Vogler and others shared their insights on some of the more pressing issues of the modern vaping industry, including:
- Vaping products have more similarities with electronic cigarettes than differences: Though the products may seem vastly different (and at times, more confusing), nearly every manufacturer pointed out the many similarities between e-cigs and vaping. Maurici cited the fact that both segments draw consumers from the same pool of adult smokers looking for an alternative to combustible cigarettes; Vogler pointed out that both segments were first sold in smaller, non-traditional spaces (such as mall kiosks or vape shops) before expanding into more traditional retail channels; while John Wiesehan III, vice president of sales for the Charlotte-based Ballantyne Brands, pointed to the initial need to educate consumers on the products. "It's an evolution," Wiesehan said. "E-cigs are kind of like the training wheels."
- Have a list of hurdles for vaping manufacturers to clear: Dead inventory has been a big issue for many retailers out there, thanks in part to companies that got into the business without the proper resources to survive in a regulated retail environment. Vogler and others suggested retailers look to the high standards wholesalers like the McLane Co. have established. If a vaping company cannot pass these "musts" in terms of insurance and liability, it doesn't really matter how cheaply they're selling their liquids. "There's a vetting process that has to happen," said Vogler. "You could probably narrow it down to a dozen or so viable companies that you can trust will be in business in the years to come."
- Merchandising must be flexible: In an ideal world, new products with an education gap in desperate need of closure would all be beautifully merchandised on the front counter; but for the convenience store operator, the front counter is a very limited, very valuable piece of property. What happens when 5-Hour Energy introduces a new flavor and wants that space? Or what about the many retailers operating in regions where regulations prohibit self-service tobacco products? "Our key learning has been that you have to be flexible," Maurici said. "One retailer's stores are going to be completely different than another's."
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