NEW YORK -- With vaporizers, tanks and mods (VTMs) emerging as the dominant e-vapor trend of 2014, it's perhaps not surprising that much of Wells Fargo's fourth-quarter "Tobacco Talks" survey focused on the growing segment. Of the retailers and wholesaler contacts surveyed, 96.3% currently carry VTMs (up from 85.3% in Q2 2014), with e-liquids and VTMs taking up the most incremental shelf space (up a respective 12.4 and 12% year-over-year).
Wells Fargo tobacco analyst Bonnie Herzog wrote in a research note that she expects the VTMs momentum to continue based on survey responses suggesting VTMs have helped turn the e-vapor segment "from negative to positive" and that vaporizers are "outselling e-cigs more and more every day from wholesale." In fact, despite a roughly 65:35 ratio of electronic cigarette products and accessories to VTM products and accessories today, respondents predicted a nearly even 55:45 ratio in just six months' time.
This momentum is not to say that retailers are on board with all VTM offerings.
"Retailers seem somewhat underwhelmed by the larger devices that are meant to 'bridge the gap' between 'traditional' e-cigs and VTMs," Herzog wrote, pointing to options from NJOY, Mistic, Logic and blu. "Our contacts feel that about 75% of the sales of these products will cannibalize existing sales rather than generate incremental sales."
"I don't think that consumers will respond to these types of products," wrote one respondent, speaking about closed system products like the Logic Pro and blu PLUS+. "Part of the benefit of open-tank systems is that the user has complete flexibility on flavor and nicotine strength."
Other retailers felt the higher price points could discourage consumers, with one retailer commenting that "at a time where retail prices are falling on traditional e-cigs, the price point on advanced systems will discourage sales."
Other retailers and Herzog, however, remained "cautiously optimistic" about the new technological innovation offered by such products.
"As technology improves, so will the consumer that has been hesitant to enter this category," said one such retailer.
Beyond opinions of different e-vapor products, Herzog also tracked a few "calls to action" in order to ensure the continued growth of the e-vapor industry. Specifically, the need for the U.S. Food & Drug Administration (FDA) to take leadership and improve public perception of the relative risks of the segment; a united front from e-vapor players, specifically to push for modified risk claims; and better regulation of vape shops that are "playing by their own set of rules" and potentially reducing the industry's credibility.
"We believe it's imperative these factors are addressed promptly," Herzog said. "If not, we're concerned that vapor category growth could continue to moderate."
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.