Ecig Market Booming Despite Regulation
As the FDA smacks down vendors flouting regulations, reports are coming in of a surge in sales of kit and accessories.
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by Dave Cross
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Under the new regulations firms must engage in a lengthy premarket tobacco application process that can take upwards of 5,000 hours and a million dollars to complete. Sales of vaping products through retail stores were reported as going soft prior to the FDA’s grace period, while during and following it Nielsen reported a 16% rise in revenue for e-cigarette sales in the four weeks ending 13th August. Likewise, year on year sales hit a double figure percentage point rise.
Bonnie Herzog, of Wells Fargo Securities, believes the jump was mainly down to smokers stocking up on products before the market felt the full impact of the FDA regulations. “We also believe the industry’s push to innovate ahead of deeming regulations contributed,” she said, while “NJoy’s bankruptcy filing underscoring greater competition.”
Ray Story, from the Tobacco Vapour Electronic Cigarette Association, said: “Companies that know they’re not going to comply with the deeming dumped their current products into the marketplace. Products have been pushed into retailer stores and are now sold so cheap that retailers are having a hard time making money.”
Aggressive pricing and marketing have driven the movement in the over-the-counter retail sector. Altria’s MarkTen XL fight for market share may have resulted in increased sales revenue, but Nielsen note that the manufacturer dropped its pricing by 16.8% over the 4 week period.
VUSE consolidated the number one spot over the summer period. The company recorded a 21% growth in sales volume and boosted profitability by 12% to boot. Herzog confirmed that they held their market share at 38.2%.
American Vaping Association’s Greg Conley said: “Those that were paying attention knew that if they didn’t get their products out by Aug. 8, they would not be able to continue to market. That was the period for new products to come out.”
While this may seem like positive news for vaping, the FDA’s Mitch Zeller provides cold words boding a tougher future: “We’re helping protect the health of America’s youth by enforcing restrictions that make it illegal to sell tobacco products to minors – including e-cigarettes, e-liquids and cigars. Retailers play a vital role in keeping harmful and addictive tobacco products out of the hands of children and we urge them to take that responsibility seriously.”
“It’s clear from these initial compliance checks that there’s a need for strong federal enforcement of these important youth access restrictions.”
Despite this, Herzog projects a healthy total US ecig market worth $4.1 billion in 2016. But for how much longer?
Greg Conley, again: “There’s an adjustment going on because many of the common everyday things vape shops do for customers are considered ‘manufacturing’ and they will not have a license to continue that practice. That includes things like screwing in a coil and putting in a battery. The FDA thinks that’s manufacturing a product. Vape shops already have had to turn away customers.”
Dave Cross
Journalist at POTVDave is a freelance writer; with articles on music, motorbikes, football, pop-science, vaping and tobacco harm reduction in Sounds, Melody Maker, UBG, AWoL, Bike, When Saturday Comes, Vape News Magazine, and syndicated across the Johnston Press group. He was published in an anthology of “Greatest Football Writing”, but still believes this was a mistake. Dave contributes sketches to comedy shows and used to co-host a radio sketch show. He’s worked with numerous start-ups to develop content for their websites.
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