NEW YORK -- One year has passed since senior tobacco analyst Bonnie Herzog hosted her first annual Wells Fargo E-Cig Forum. That year has seen a lot of change in the ever-evolving segment: vape became the word-of-the-year, two Big Tobacco companies entered the space, and the long-awaited proposed deeming regulations were finally announced by the U.S. Food and Drug Administration (FDA).
All of which had Herzog as bullish as ever on the segment, saying “I continue to wonder: Is this the beginning of the end of combustible cigarettes?”
Another question weighing heavily on the minds of those in attendance is which retail channel will eventually benefit most from this tobacco segment of the future. Will it be traditional tobacco outlets, such as convenience stores, or will the high-end, product-centric vape shops and lounges continue to grow at the rapid rate we’re seeing today and ultimately dominate the space? Or, is it possible that regulatory framework will allow the survival of online sales?
Opinions were understandably divided.
Some, such as Miguel Martin, argued that, because the majority of vaping consumers were at one point smokers, they prefer to purchase their e-vapor products at traditional tobacco outlets.
“Long-term, the vast majority of adult consumers will buy their vaping products in c-stores,” said the president of Logic Technologies Inc., Pompano Beach, Fla. “I think vape shops are a short-term piece that the majority of e-cig or vape sales will exist where cigarettes are sold.”
As such, many vaping manufacturers are focusing on the c-store channel, with Todd Miller, CEO of the Charlotte, N.C.-based Ballantyne Brands, stating “penetrating the c-store channel is our No. 1 priority for next year.”
Even companies that have traditionally focused on vape-shop or online sales acknowledged the opportunity within c-stores.
“It’s called a convenience store for a reason,” said Nick Molina, CEO of International Vapor Group, Miami Lakes, Fla. “If you quickly need an e-liquid flavor that’s available at your corner Circle K, that’s where you’re going to go, not all the way to a vape shop.”
Which isn’t to say that Molina agrees with the sentiments of Martin and others; for him (and many vaping companies), vape shops represent a very long-term play.
“Vape shops are always going to have a place because c-stores don’t have the ability or infrastructure to provide the same service,” he said, citing SKU and flavor varieties and one-on-one attention as examples. “Our passionate vape-shop consumers are never going to go to a c-store to buy e-liquids.”
Though Scottsdale, Ariz.-based NJOY has been a major player in the c-store space, CEO Craig Weiss noted that data shows vape shops are often doing 100 times the e-vapor business of the average c-store, describing the channel as “critical.”
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