United Kingdom Experiencing a Slow down in E-cig Market

Source from:  Financial Times 03/27/2015

The Financial Times reports that the market for e-cigs is witnessing a slowdown in the UK, mirroring the trend in the US, largely due to rising competition from customizable vaporizers, stagnant use rates, and a growing body of research questioning the devices' safety, and that this slowdown has prompted major tobacco companies to develop new alternative products that more closely mimic the experience of traditional cigarettes. BAT, which launched its Vype e-cigs in 2013, has already received the UK Medicines and Healthcare products Regulatory Agency's approval to sell its cigarette-shaped, nicotine inhalation device Voke as a medicinal product.

The company is awaiting further approval to make Voke available in retail stores. Japan Tobacco International, which acquired the traditional E-lites e-cig brand in 2014, has also launched the Ploom "heat-not-burn" device in the UK. Philip Morris International, which has invested US$ 2.0 billion in developing alternatives to cigarettes, is test marketing in Japan and Italy a pen-like device called iQos that heats, rather than burns, tubes of tobacco called Marlboro HeatSticks. PMI, which predicts the product could make an annual profit of US$ 700 million if it achieves a sales target of 30 billion units, is boosting iQos production capacity with a new factory in Italy. Shane Macguill, a tobacco analyst at Euromonitor, said despite the availability of a wide range of e-cig brands, there is "no single ecigarette product or brand that is really commanding the attention of consumers," which could explain the stagnation in sales.

Although sales rose 50% to 17.2 million units in the UK last year, the bulk of that increase occurred in 1Q14. Sales have been broadly flat since April 2014, despite a seasonal surge in December 2014 and January 2015 "driven by Christmas gifting and the January quitters," according to Nielsen. Jan Verleur, who runs online e-cig retailer VMR Products, said even customizable vaporizers, whose sales have overtaken cig-alikes, are unlikely to win over the vast majority of smokers, noting that "[r]ight now, as the technology stands, at best you could get 15 to 20 per cent of the customer base to transition over." A device that could get nicotine into the blood as quickly and efficiently as regular cigarettes could prove to be the "holy grail" for the industry, he added. Enditem