The vaping sector supports nearly 18,000 jobs in the retail supply chain and is contributing £805 million per annum to UK GDP, as the UK reaps the benefits of its far-sighted investment in vaping and other alternative nicotine products, according to a new report.
Alternative nicotine products – including vaping products (such as e-cigarettes), tobacco-free oral nicotine pouches and tobacco heating products – deliver nicotine without the need to burn tobacco, making them potentially less risky than traditional combustible tobacco products.
A new research report by Oxford Economics demonstrates for the first time the massive economic footprint of the UK’s public health leadership position in vaping and other alternative nicotine products. According to BAT UK, which commissioned the report, the UK is now the global leader in developing high quality alternative nicotine products, generating significant economic benefits for the UK economy.
BAT filed more than 170 patent applications in the UK in 2019 on new alternative nicotine products inventions, making it the UK’s seventh-largest patent applicant in 2019.
By 2019, there were 3.1 million vapers in the UK, a growth of more than one million in just five years. This report highlights research which shows that 97% of all vapers are current or ex-smokers, with two thirds using vapour products either as an aid to stop smoking or because they see vapour products as a less harmful alternative to smoking.
In 2019, BAT’s activities and investments in alternative nicotine products contributed £360m to UK GDP, supporting 7,100 jobs and 60 vapes stores on UK high streets.
BAT scientists conducted 164 tests on its Vuse brand alone, including 27 behavioural science tests, 82 chemistry tests, 35 biological tests and 20 clinical tests. BAT holds the largest published dataset on a single vaping product.
Fredrik Svensson, General Manager BAT UK & Ireland, said that “UK policymakers made a bold statement by becoming one of the world’s leading advocates of vaping as an alternative to smoking. As this new report makes clear, the benefits to the UK economy of this progressive position are now paying dividends.
“BAT has backed up the government’s bold stance by making big investments in UK-based vaping research and development, unleashing domestic economic growth and jobs, and positioning the UK to drive innovation globally in this fast-growing sector.
“Now other countries are finally seeing the light too and looking to the UK for leadership. Not only are these investments helping to design the alternative nicotine products of tomorrow, they are bringing thousands of jobs back into our regions, supporting high street businesses and boosting our economy. What this report shows above all else is that everybody wins when we back UK science and innovation.”
Kate O’Dowd, Head of Commercial Planning UK & Ireland, Philip Morris Limited, comments: “Already this year, sales of cigarettes and Roll-Your-Own (RYO) products have increased, with declining access to illicit and duty-free products seemingly pushing up the premium end of the market. Despite this increase in traditional tobacco, the exponential growth of smoke-free categories – which include heated tobacco products and e-cigarettes – continues to build unstoppable momentum.
“Not only are these smoke-free alternatives a better choice for adult smokers who don’t quit, but they also represent the future of retailer economics.”
At the end of 2020, a survey carried out by KAM Media on behalf of PML, found that more than a third (38%) of all retailers expect more adult smokers to switch to smoke-free categories in 2021. Despite comparatively small sales in relation to traditional tobacco, smoke-free products are eating into the market share of cigarettes. The sales of heated tobacco products, for instance, grew by 270% in 2020. The performance of HEETS heated tobacco sticks demonstrates the strong traction of IQOS – Philip Morris’s tobacco heating system used in conjunction with HEETS – which has more than 17.6 million users worldwide.
Share of market for HEETS in London and the UK has grown to 3.8% and 1.8%, respectively, with the UK now one of the fastest growing markets for HEETS in Europe (ibid).
An unequalled conversion rate – approximately 12.7 million adult smokers globally have switched to IQOS and stopped smoking cigarettes completely – good value for money, and increasing availability of product, drive the performance of heated tobacco nationwide.
As already evidenced in the KAM media survey, many retailers expect a further increase in the number of their customers seeking better alternatives to cigarettes in 2021.
Conversely, 18% are expecting those numbers to fall (ibid).
“Undoubtedly, the best decision any adult smoker can make is to quit tobacco and nicotine products completely,” says O’Dowd. “However, it is vital that retailers provide a wide range of alternatives to ensure differing preferences, such as taste and sensory experience, are met. Increased choice may be the difference in an adult smoker switching to a less harmful alternative over continued smoking.”
Soon, PML will be launching its new Digital Trade Engagement platform, HEETWAVE OPEN. The company has invested significantly in strengthening the digital support it offers retailers to include online training tools that improve knowledge of its expanding smoke-free portfolio, whilst also encouraging more peer-to-peer advice sharing through the platform and a new FAQs section to provide stockists with an initial reference point, should they need support.
Paola Midence, Brand and Trade Manager at Swedish Match, supplier of the ZYN brand, comments: “Tobacco-free nicotine pouches remain a small part of the next-gen category but are growing fast. The tobacco-free nicotine pouch market grew exponentially in 2020, with total sales of around 1m cans (Nielsen).”
Mint is by far the most popular flavour for tobacco-free nicotine pouches, representing around 70% total market volume (Nielsen).
ZYN’s best seller is the Cool Mint 6mg, but it also offers a 3mg pouch for those wanting a lower level of nicotine. Its Spearmint ZYN nicotine pouch contains only 1.5mg nicotine.
“As a relatively new category, education around tobacco-free nicotine pouches is critical so every consumer can understand where, and when, it might be right for them,” adds Midence. “The experience of nicotine pouches is very personal, so the consumer needs to find the right product for them.”
For this reason, it is also important to offer a range of flavours and strengths: although mint dominates, some consumers prefer a fruit base like ZYN Citrus, and ZYN also offers something special for coffee lovers with ZYN Espressino.
“We believe in offering adult nicotine users a variety of products to fit in with their lifestyle and personal preferences,” Midence continues. “We are confident that ZYN nicotine pouches can provide a relevant and enjoyable alternative for consumers. With ZYN, there is nothing inhaled, and nothing exhaled, meaning that whenever you can’t smoke or can’t vape, you can use ZYN.”
ZYN had three products that launched last year: Espressino 3 and 6 mg and Spearmint 1.5 mg.
“The category is still very new and unknown so both visibility in store and education are key so that consumers can be made aware of this alternative and can try a product that fits to their lifestyle. We can see that the product sells better when it is located on the shelf,” Midence continues.
ZYN will introduce a new flavour during summer inspired by the feeling of enjoying a drink on a warm sunny day by the Mediterranean Sea. It will be found in two strengths: strength 2 for medium and strength 4 for a stronger experience.
Duncan Cunningham, UK Corporate Affairs Director at Imperial Tobacco & blu, comments: “The vape category is currently worth around £1bn in the UK, with around 30% of vaping sales taking place in traditional retail stores (20% online, 50% specialist stores). Whilst it is still too soon to know what the full impact of the pandemic will be, there are some trends emerging that could be shaping convenience store sales in the vaping category.”
Overall, pod-mod systems like myblu are becoming increasingly popular thanks to their ease of use and flexibility. Whilst open systems have traditionally dominated the vaping category, currently making up 81% of the market, the introduction of pod-mod devices in recent years has seen closed systems, such as myblu, continue to trend upwards, regaining its share of the category back towards 20% (ECigIntelligence).
Over the past year within traditional retail, nicotine salts (nicsalts) have grown to become the preferred liquid for pods. Nicsalts result in nicotine being absorbed into the body faster than normal e-liquids. This rapid absorption of nicotine through nicsalts allows products like myblu Intense to more closely replicate the experience of smoking a traditional cigarette. This appeals to adult smokers looking to switch for the first time, or those who have tried vaping in the past and haven’t been completely convinced.
myblu is the innovative pod mod system from e-vapour brand, blu. The myblu device combines the performance demanded by experienced vapers with the ease-of-use appreciated by new entrants to the category. The device’s hassle free Liquidpods allow vapers to switch between flavours in seconds via a simple one-step ‘click and go’ system.
“We recommend stocking at least one open and one closed system from a big brand like blu,” adds Cunningham.”
Pod-mod systems like myblu have become increasingly popular thanks to their ease of use and flexibility. The range of devices on offer should always be supported with a strong portfolio of e-liquids, especially fruit and menthol flavours, in a variety of nicotine strengths, including nicsalts like myblu Intense, to cater for all tastes. The best-selling variant in the myblu range is the Menthol Intense Liquidpod so Imperial Tobacco highly recommends this as a must-stock for all retailers.
“As retailers become more familiar with the category and their customers’ needs, we recommend tailoring the range offered to ensure it caters to demand,” Cunningham suggests. “Proactively engaging with shoppers at the till point is a great way to provide excellent customer service. Retailers can use these conversations as an opportunity to advise customers on the different products and any supporting promotions available. As well as offering customers the much-needed support they need, doing so will also help retailers gather useful intel about their shopper purchasing habits that will help them shape their range.”
It’s a good idea to have a strong visual display of vaping products, positioned away from the main gantry where possible, with clear information on pricing to enable customers to browse at their leisure without the need to handle and inspect products. Where space is limited, even a small countertop unit can help achieve this, especially if it is well organised and fully stocked. Making sure it is positioned in a well-lit part of the counter will also help increase visibility of products even further.
“Shoppers are often drawn to products displayed at eye-line so to help attract their attention, we’d recommend placing devices at this level, and then the supporting brand e-liquids or accessories on the shelves above and below,” Cunningham continues. “Low margin products, or cheaper brands, should be placed on the lower shelf, with higher margin products above the devices. Also, grouping the respective brands together in a well-organised display will help to create further shelf-appeal for products, as well as making it easier for staff to locate products for quick service and maintain stock levels.”
John Patterson, Sales Director Juul Labs UK, comments: “The UK vaping category continues to grow year on year with the figures from IRI showing that total sales in tracked channels have increased by 46.8% over the past year. The biggest rise has been in closed systems refills with 65% growth while eliquids for open systems have increased by 27% (IRI).”
Closed pods systems, such as JUUL, is the leading segment in the category, having overtaken open systems in August 2020, with multiple retailers in particular embracing closed systems as part of their alternative offer for adult smokers.
Of all closed category sales in tracked channels, multiple retailers and key accounts have a 70% share, with 30% of sales going through the independent channel.
The popularity of closed systems as an alternative to cigarettes is largely due to their simplicity: they are simple for the adult smoker to use as they are ready out the box, using prefilled cartridges and there is no need for detailed product knowledge for the retailer.
Since its launch into traditional retail in November 2018, IRI data shows that JUUL is now the number one vaping brand by value and JUULPods account for four out of the top five best selling closed system skus in multiple retail (IRI).
As a company, Juul Labs believes flavoured products can play an important role in helping adult smokers transition away from combustible cigarettes and JUULPods are available in Mint, Menthol, Berry, Mango and Tobacco, all in 18mg/ml nicotine strengths, offering adult smokers a choice of options across flavour segments.
“Juul Labs and the vaping category exist to help end the era of combustible cigarettes, however more has to be done to highlight the relative risks of vaping in comparison to cigarettes, as there remains confusion and misperceptions around the harm reduction potential of the category,” adds Patterson.
E-cigarettes could offer adult smokers who cannot – or will not give up – an opportunity to transition to an alternative and potentially reduce the harm caused to themselves, and others. Retailers can also play their part in helping adult smokers transition by familiarising themselves and their staff on the various alternatives to combustible cigarettes and the range of options available.
“Keeping a well-stocked, visible display with good availability on key brands will retain the footfall of these vapers and those adult smokers who wish to transition away from combustible cigarettes in the future. It’s about providing choice, and a range of options and alternatives,” Patterson suggests.
Adult smokers tend to purchase the same brand at the same stores on a regular basis. By offering alternatives products where they purchase their tobacco, retailers can introduce them to options which are potentially less harmful than cigarettes.
Kieran Marsh, portfolio brand manager at JTI UK, comments: “The 100% tobacco-free nicotine pouch category continues to grow and shows no signs of slowing down. Now more than ever, existing adult smokers and vapers are looking for convenient products that can be used when smoking or vaping might not be possible – making them a must-stock for retailers this year.”
The nicotine pouch category in the UK is growing and is now worth approximately £15.8 million a year (IRI).
Nordic Spirit is a 100% tobacco-free nicotine pouch brand and is available in a variety of flavours and strengths including Mint, Bergamot Wildberry and Elderflower in regular and strong variants, with Mint also available in an extra strong option.
Vapers are looking for convenient and easy-to-use devices that allow them to experiment with various strengths and flavours to find the right fit.
Closed tank devices, or pod mods, are currently the fastest growing vaping segment in the UK, as well as the biggest segment within the category for value sales (IRI).
“Our premium pod device, Logic Compact – the UK’s number one closed tank device in traditional retail – offers a modern and convenient alternative to traditional vaping products,” adds Marsh. “Assembly couldn’t be easier, with pre-filled e-liquid pods that click magnetically into place, making it easy to experiment and switch between different flavours and strengths.”
A growing number of existing adult smokers are looking for an alternative but familiar tobacco experience in the form of heated tobacco products.
JTI estimates that by 2025 there will be nearly one million heated tobacco users nationwide and that traditional retail will contribute to two thirds (67%) of this volume.
To help retailers profit from this growing category, at the end of 2020 JTI launched Ploom, a sleek, unique and innovative heated tobacco product alongside EVO tobacco sticks available in four different flavours.
Last year, Logic Compact Intense, a range of refill flavour pods with nicotine salts, were introduced to offer a smoother and more intense flavour delivery. The range includes flavours such as Amber Tobacco, Peppermint, Polar Menthol and Berry Mint. The pods are compatible with the popular Logic Compact device and have an RRP of £5.99.
Nordic Spirit is the UK’s leading tobacco-free nicotine pouch brand (IRI). Joining Mint, Bergamot Wildberry and Elderflower, JTI has introduced an extra strong Mint variant to offer even more choice to customers, to help cater to every preference.
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