Flying in the face of concerns over the effects of impending legislation curbing the vaping phenomena, Euromonitor International, the world’s leading provider for global business intelligence and strategic market analysis, confidently predicts that the electronic cigarette market will break $50 billion (£32,000,000,000) before 2030. “Since its introduction to the market in 2005, vapour products have grown by nearly 70 percent, eclipsing nicotine replacement therapy products,” said a representative of Euromonitor.
Euromonitor announced that the worldwide market has doubled during the period 2013-2014, from under £2 billion to a currently estimated net worth of almost £4 billion. The driving force of the growth is not laid at the feet of Big Tobacco marketing departments but attributed to the same factors that gave birth to the electronic cigarette: smokers and ex-smokers seeking a healthier life.
The largest market share resides in the United States of America whose vaping community has embraced the technology. Roughly half of the market value is made up in American sales with the United Kingdom coming in second.
Previous research from Professor Robert West (as part of the Smoking Toolkit Study) has highlighted how the demographics show a continual shift from Generation 1 products (cigalikes) to more complicated tank systems. The increased reward from personalised vaping systems locks in a non-smoking behaviour pattern and Euromonitor do not see a tail-off in potential customers.
Globally, the number of vapers (including dual users who continue smoking) now tops 13 million people. The research claims numbers will flourish at 29.3% annually with Japan, the US, Egypt and Switzerland at the forefront of the development. In fact the growth is predicted to be so dramatic that Euromonitor estimate a market value of £16 billion by 2019 but a Chinese cigarette market worth £137 billion dwarfs this.
This contrasts sharply with Nielsen data demonstrating the continuing slump in the traditional tobacco market. A month on month 0.4% decline in actual sales volumes has begun to speed up, dropping 1.4% as we entered June. Imperial and Altira’s sales flat-lined as Reynolds slumped in both the trading and investment markets but their figures masked a real story: slumps of between 23% to 54% were being covered over by the success of the new cigalike brands such as Mark10 and Vuse. Even then, the two products have been hit by tumbling share values as only Imperial’s Blu Ecigs managed to increase stock price and market sales volume. Consequently, as reported by Wells Fargo, Reynolds' Vuse and Altria's MarkTen are aggressively marketing themselves with promotions, coupons and customer trials in order to bite into Blu’s market share.
Growing ecig use in the UK has contributed to further falls in the sales of traditional nicotine replacement products (NRT). Euromonitor highlight a domestic growth of 75% to £460 million’s-worth of vaping kit and juice while the NRT market fell by another 3% to £140 million. The disruption of the previously buoyant Pharma market will no doubt inspire repercussions as the companies seek to shore up their sales by any means necessary.
The dominance of vaping over NRT began back in 2012 and we are now part of a market worth three times its value. Caution should be expressed at this position as the UK’s rise to No.2 in the vaping world has only occurred due to the imbecilic measures adopted by the Italian government. With the new laws they passed at the end of 2014 they wiped 39% of the value from home sales figures.
Shane MacGuill, representing Euromonitor, said: “Up until now there has been no direct competition for cigarettes in a meaningful sense, and nicotine replacement therapies were certainly not providing that. The days of the traditional cigarette are numbered – the only question is how long that process will take and ecigarettes have the potential to drastically shorten the shelf life of traditional tobacco products.”
Despite the tobacco market being worth thirty times that of vaping, eyes must now surely be looking to the moment they cross over – and Wells Fargo have done just that. They are predicting the value of vaping-related sales to overtake cigarettes by 2020 at the latest.
The only word of caution comes from Trefis, a market intelligence company, when they highlight: “The e-cigarette market, which until now was devoid of any regulation, may come under the same level of scrutiny that the tobacco industry deals with. Furthermore, studies regarding the penetration of e-cigarettes among the youth, and the consequences of this, has renewed interest of regulators, who now see the product as one that they may deem to gain regulatory control.”
Regulators may well impose tighter restrictions but there are fifty billion reasons why anyone predicting the death of vaping is probably wrong.