POMPANO BEACH, Fla. -- When speaking at a Wells Fargo-hosted "Tobacco Talk" conference series in August, Logic Technologies Inc. president Miguel Martin teased that the leading e-cig manufacturer had big technology advances in the works. At next week's NACS Show in Las Vegas, retailers and wholesalers will get a first look at one of such advancements: the Logic PRO Advanced Vapor System, a "closed-system" vaporizer pen that uses proprietary capsules instead of e-liquids.
"We've been aware and following this whole open-system/vaporizer phenomenon for a while, working diligently with the engineers to create what we wanted to be truly next-generation technology," Martin told CSP Daily News. "We took a vaporizer, but all new components. Instead of having that atomizer that drips in e-liquid, we have created a capsule that slots in and gives you that vaporizer-like performance with a sealed capsule."
The company developed this kind of closed-system/capsule model, in part, to benefit retailers, he said. While traditional open-system vaporizers allow consumers to purchase liquids online, the Logic PRO only works with the capsules, which Martin said will be featured at retail, as opposed to online (with PRO selling at a much higher price-point on Logic's website).
"That's a big part of this," he said. "Not only do we believe that the performance is better, but the format of consumers having to buy the product at retail was important. Getting the technology right to be able to use that capsule was really powerful to us."
Though vaporizers have been thriving online and in vape shops—with Wells Fargo analyst Bonnie Herzog estimating more than $600 million annual sales in these untracked channels—Martin said the company will continue to concentrate on traditional retailers for Logic PRO.
"Our focus is on where adults buy cigarettes," he said. "Anywhere that happens, we're game to sell our products."
Besides helping to protect retailers' bottom line, this kind of closed system also addresses many concerns expressed by both regulators and some convenience store retailers leery of getting into vaping because of potential problems with the e-liquids.
"Because it's sealed, it's very regulatory forward," said Martin. "You don't get the accidental exposure to children or pets, you don't get the mixing, you don't get the concerns people have about sourcing."
"Consumers have also expressed usage issues with the tanks," he continued. "They're messy, they degrade over time, you can't change out flavors. These capsules, you can swap them out and switch flavors in a way you can't do [with a traditional open system]."
In terms of flavors, the company will stick with a tobacco-only approach, offering capsules in its signature Black and Platinum Tobacco and Black and Platinum Menthol options. Though Martin said the system is worth significantly more, the Logic PRO will retail at an "approachable" $24.99 price; capsules will retail in a five-for-$9.99 pack.
"But those five capsules have 25% more puffs than a 10ml bottle of e-liquid," Martin added, promising that PRO will also offer the same retail-friendly margin structure as the company's electronic cigarettes.
"I would agree with [Lorillard CEO] Murray Kessler's comments. Part of the reason vaporizers have been so popular is that people have not found enough satisfaction with the current rechargeables and disposables," said Martin. "People are gradually trading up if they want a more robust experience. Logic PRO does that. We're not chasing the guy or gal who wants to go into the vape shop for a large format vaporizer battery--we're after the mainstream adult smoker who's looking for an alternative."
After unveiling the product at the NACS Show, Martin said Logic PRO should hit retail shelves in winter 2014.
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