'A Lot of Misconceptions' on OTP

E-cigs, other smoke-free alternatives at center of Lou Maiellano's CRU session

Melissa Vonder Haar, Freelance Writer

GLENDALE, Ariz.-- "Eighty percent of smokers are looking for alternatives," Lou Maiellano informed the tobacco retailers and manufacturers attending his "Satisfying Tobacco & OTP Shopper Needs" Convenience Retailing University (CRU) session. "They're not always looking to quit, but they want alternatives."

As a former tobacco buyer for Sunoco and current president of the Sevierville, Tenn.-based Taz Marketing & Consulting Group, Maiellano believes both retailers and manufacturers need to embrace the alternative and smoke-free tobacco products consumers are calling for.

"The big winners will be [manufacturers] that find socially acceptable ways to deliver the satisfaction of tobacco to those who desire that satisfaction," Maiellano said, "and [retailers] that look at what products meet the consumer's needs in the future and aggressively embrace the opportunities that change brings to their business."

Electronic cigarettes seem to be a natural fit for the "socially acceptable" products describe--and with Taz Marketing's numbers showing the nascent segment netting between $650 million to $700 million in sales during 2012, there is reason for the growing excitement over the category.

Still, with "probably 380 electronic cigarette companies selling in the U.S.," Maiellano warned retailers to be cautious. "The majority of reports coming out in the media are not right," he said. "There's a lot of misconceptions out there."

One of the big misconceptions out there comes from companies claiming to be No. 1, claiming a majority of electronic cigarette sales: Maiellano joked that by his calculations, five e-cig companies accounted for 140% of sales last year.

And even if a company does have the numbers to back up such claims, it doesn't necessarily ensure success in the long run.

"Companies that were one day No. 1 are now extinct," said Maiellano, citing Smoker's 1 Choice, a brand that was quite successful in the early years of electronic cigarettes, but is now obsolete.

That's not to say electronic cigarettes won't have a prominent place in the "no-smoke zones" and "ATP" (alternative tobacco product) sections Maiellano encouraged retailers to consider--just that they need to have patience with the evolving category.

"It's very important to realize that more new products fail than succeed," said Maiellano, noting that a mere 41.2% of new tobacco products succeed after six months. "But we need to give them a fair chance."

"Times are changing," he said. "Accept it and go with it. Accept the challenge, look at the opportunities, be aggressive and segment your market--one size does not fit all. Managing this category will have many challenges; managing this category will have many rewards."