With dozens of product launches and new brands appearing on scene in recent months, the vape and next generation nicotine category is one of the most compelling in convenience today.
From the billions (yes, billions) of dollars invested by the biggest players to the emerging brands that are adding innovation and choice to the nicotine market, suppliers are creating a fast-growing category that provides a long-term solution to industry concerns about declining tobacco sales in the coming decades.
It isn’t only suppliers who are excited about the opportunity that vape presents to the industry – wholesalers are also getting in on the action.
“The vape category has shown tremendous growth and is continually evolving, which makes it a real challenge to get the most out of it,” says Kenton Burchell, trading director at Bestway Wholesale. “We know many retailers struggle with the variance of devices and liquids in the market and also have stock from all sorts of sources, much of it given to them free. This can result in them having an incoherent range or products - particularly devices that become obsolete.”
Despite the challenges, Burchell says that stores are increasingly seeing the profit opportunity in vape and deciding to invest the time and space needed to capitalise.
“Ever more retailers are seeing the benefit in offering a core range of pods and liquids that will satisfy most vapers’ needs. We can see this category continuing to grow as more and more smokers see the health, not to mention financial, benefits of switching to e-cigs from tobacco. More and more retailers also see the profit opportunity that is well worth the investment in time and space in store needed to understand the category and get the most from it.”
Operating during a pandemic
It’s both a cliché and a fact that most convenience categories have been hugely affected by the coronavirus pandemic. It is important to remember that 2020 has also seen the arrival of the menthol ban. Finding time to build and manage a vape range has therefore been a challenge for many store owners Asian Trader speaks to each week. Yet, according to the industry, the numbers suggest focusing on vape is paying off for retailers.
“The vaping category has experienced solid growth in the past few years,registering significant double-digit growth each year,” says John Patterson, Sales Director, Juul Labs. “More recently, if we look at sales this year, in the twelve weeks pre and post the removal of menthol cigarettes, IRI figures show the vaping category in tracked channels grew by 12.6 percent –but it is the closed pod category that is driving the majority of the growth. Indeed, these figures show JUUL, in particular,experiencing growth of 65 percent and being responsible for over a third (37 percent) of all growth in the category.”
Pod mods are convenience-friendly
According to some suppliers there are areas of this broad market which overperform within convenience, where a different mix of customer types is reflected in sales.
“Closed pod refills and e-liquids tend to work best in convenience, given they are pre-mixed and simple to use, and should form the majority of space on the fixture, with at most 20 percent given to hardware,” says John Patterson. “Smokers tend to buy the same products from the same stores, so offering them a range of refills for the best-selling closed pod devices and a range of e-liquids for open systems – in the same stores where these smokers purchased their cigarettes – is the best way to grow the category in convenience stores.”
The podmod market has become an engine of innovation for the industry in recent years and 2020 is no different. One eye-catching launch has been the arrival of EDGE Hybrid which combines capsule vaping with the traditional filter found in ready-made cigarette sticks. The product is designed to provide the familiarity smokers need to jump from combustible tobacco towards vape. Flavours included in the system include Tobacco, Very Menthol and Blackcurrant.
The company says: “Born out of consumer demand, EDGE Hybrid is a next generation product that bridges a significant gap in the market… According to research 60 percent of smokers are wanting to quit but 37 percent of those who have tried vaping but dislike the hard, unfamiliar mouthpiece.”
EDGE Hybrid filters also feature a cigarette-style crushball.
One new brand that is looking to find a place in this fast-growing market is RELX, a brand that already has an established footing in the Asian vape market. The RELX Infinity device features a ceramic coil that helps to provide a “SuperSmooth” experience for vapers.
Micaela Sangiovanni, senior trade marketing manager at RELX:“Infinity and Essential ceramic pods offer 1.9ml nicotine and last around 500 puffs based on average consumption. They are the only pods in the market designed with the SuperSmooth feature which provides rich and dense vapour with just the right temperature, appropriate draw resistance and a quiet inhaling experience, giving users a consistently smooth and familiar experience from start to finish.”
Of course, alongside these new players, the capsules market has a set of established big players which have continued to invest in their brands in 2020, from JUUL and Myblu to Logic Compact and Vype.
Display advice
For a category that can seem filled with new jargon and fast-changing product ranges, there is at least some recognisable and simple category management advice that will help stores boost sales. And this includes how to position a vape display:
“Shoppers are often drawn to products displayed at eye-line 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,” says Duncan Cunningham, UK corporate affairs director at blu. “Low margin products, or cheaper brands, should be placed on the lower shelf, with higher margin products above the devices.”
One other familiar tool when constructing an effective display is brand blocking, says Cunningham: “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.”
As display is such a key way for firms to develop their own brand recognition, it is an area where suppliers of all kinds are willing to lend a hand.
“We have a full range of proven point-of-sale display solutions, which help to drive sales; from counter-top units (CDUs) taking a small footprint in prime positions, to compact-yet-impactful free-standing display units (FSDUs), or even full vape walls to really make an impact,” says John Taylor, chief marketing officer at Dinner Lady vapes.
And if one solution doesn’t meet a store’s needs, companies such as Dinner Lady are happy to come up with something bespoke. “We can customer-design materials for your specific space, by working with our in-house designers, to best suit the retail environment,” Taylor adds.
Focusing on new flavours
With flavour such a vital component of this market, it has understandably become a focus of product development.
“We believe that in order to successfully transition adult smokers away from cigarettes, products have to appeal to adult smokers, be satisfying and replicate their previous cigarette choices,” says John Patterson at Juul. “We launched Menthol JUULpods in April to offer adult smokers, particularly those who preferred mentholated cigarettes a wider range of alternatives. Our latest launch of Rich Tobacco JUULpods addresses the desires of adult smokers who prefer the flavour profile Virginia tobacco, the blend used in nine out of every ten cigarettes sold in the UK. while Menthol JUULpods is the most successful launch this year in terms of value sales.”
Duncan Cunningham agrees that menthol is now key. He says: “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. Our best-selling variant in the MyBlu range is the Menthol Intense Liquidpod, so we would highly recommend this as a must-stock for all retailers.”
Getting the right flavours to vapers is just as important in the more specialist e-liquids market. “The development of flavours is only limited to the creativity of the mixologist,” says Luke Van Dijk, sales direct at Flavour Warehouse, brand owner of Vampire Vape. “It is possible to replicate most imaginable flavours. However, that does not mean that all flavours become popular to vape. Throughout our eight years of manufacturing, we have seen many flavour trends but ultimately, it’s always the core fruit, menthol and tobacco flavours that remain the most popular.”
While the bestsellers are clear, major brands are following specialist e-liquid brands in creating ever more eye-catching flavours. One such flavour comes from BAT’s Vype range which recently launched a Tequila Sunrise e-liquid, which the company describes as an “adult-appropriate beverage-inspired” flavour.
Evolution of e-liquids
There is so much focus on podmods or capsule systems that it can be easy to forget that open systems remain at the heart of many stores’ vape sales. As with other areas of this market, the e-liquids sector is changing fast thanks to the pace of innovation.
“The two major liquid developments in recent years have been both the emergence of nicotine salts and the increase in menthol tobacco flavours resulting from the recent menthol tobacco ban in May 2020,” says Luke Van Dijk.
Nic salts, for the uninitiated, is an alternative to the more traditional freebase nicotine used in most e-liquids. Nic salts are understood to have a quicker body absorption rate,making them ultimately more suited to recent ex-smokers who are looking to maintain the nicotine “hit” associated with tobacco.
Nic salt e-liquids are now ubiquitous across e-liquid brands big and small and have also moved into the capsules market with the likes of myblu Intense and VypevPro cartridges.
Heat not burn
This segment of the “next generation nicotine products market” has been so far something of a slow burner. Not anymore.
This month has seen the launch of JTI’s Ploom system, currently available in just 30 London stores after the 30 vape specialist businesses (and two JTI-run Ploom “lounges”) were forced to close within days of the launch due to lockdown.
Ploom is the first competitor to Philip Morris’s IQOS system and features a new shape, promising a no-puff limit experience. The system uses EVO sticks, the equivalent of IQOS’s HEETs, which retail at £4.50 per pack of 20.
Nick Geens, Head of Reduced Risk Products at JTI, says: “It is predicted that by 2025 there will be nearly one million Ploom users nationwide and that traditional retail will contribute to two thirds (67 percent) of this volume.”
While the plan is to launch Ploom gradually, starting solely in the capital, stores which wish to stock the system are encouraged to speak to their JTI rep.
IQOS, meanwhile, isn’t standing still. The company has launched Sienna Caps. The company says: “Sienna Caps HEETS offer the rounded, toasted tobacco blend of Sienna Selection with its woody and light tea aroma, which in a click delivers a cooling menthol breeze with notes of zesty mint.”
With BAT’s Glo heat-not-burn system launching in multiple European markets in 2020, it is likely that 2021 will be a big year for the sector.
Pouches
Another area of this market which has developed substantially during 2020 is nicotine pouches.
One brand to emerge is Swedish Match’s ZYN pouches which the firm describes as “a modern way to enjoy nicotine, free of smoke and free from tobacco”.
“This enables you to have your nicotine wherever, whenever: at the pub with friends, during a business meeting or at home. Always stay present in the everyday moments. Now you can”, says Paola Midence, Swedish Match Brand trade manager Europe.
The product is already available in independent stores but its market position was recently boosted by being listed in almost 1,300 Sainsbury’s stores.
British American Tobacco is also investing heavily in the pouch market with the recent launch of its VELO brand in the UK. Flavours include Polar Mint, Tropic Breeze, Ice Cool and Urban Vibe.
JTI’s Nordic Spirit and Imperial’s ZoneX have also launched over the past 12 months, making this one of the most vibrant segments of the next-generation market.
That there is so much activity in this market – across each of its individual segments – is further proof that this is a category that now demands attention of stores of every kind. Only one question now remains: What are you waiting for?
Parliament is to launch an inquiry into delays in compensation settlements for sub postmasters affected by the Horizon scandal.
The newly-formed Business and Trade Select Committee will call ministers, subpostmasters and their lawyers to give evidence next week with a second session to follow in mid-November. The Committee’s chair, Liam Byrne MP told ITV News that there was “definitely a delay” in people coming forward for payment.
“What we’re hearing from subpostmasters is that if there is an argument about how much should be paid out, the first offer is made quite quickly but if there’s a negotiation, that negotiation is dragging.
“We on the committee are going to batter away at this, week in, week out, until it is job done. All of us on our committee are frankly horrified and outraged by how long this has taken and we’re just not going to give up, ” he said.
Sir Alan Bates, the Post Office campaigner and chair of the Justice for Subpostmasters Alliance, is expected to be invited to give evidence. Earlier this month, Sir Alan states that his own claim had not been addressed and that he had written to prime minister Sir Keir Starmer asking for his intervention.
“Like many of the groups, my claim has not been completed. It’s ridiculous. I am one of just many in this position. This is why I wrote to the Prime Minister at the start of October, asking that he instruct the department to ensure that all claims – and I’m talking about in the GLO group, the original 555 – have been completed by March next year," he said.
This comes weeks after the Post Office's outgoing CEO agreed the government is using the company as a "shield" over compensation schemes. Nick Read, who resigned last month, was giving evidence at the Post Office Horizon IT Inquiry for the second day, with a focus on delays to victims' financial redress.
He also admitted that the compensation process has been "overly bureaucratic" and expressed "deep regret" that the Post Office had not lived up to delivering "speedy and fair redress".
Convenience store body Association of Convenience Stores (ACS) today (30) has warned the Chancellor about the negative effects of the new National Living Wage (NLW) increase, a day after the Chancellor announced a pay rise for over 3 million workers next year, with NLW rates rising by 6.7 perc cent.
From April 2025, the NLW will increase from £11.44 to £12.21 while 18-20 National Minimum Wage will rise by £1.40 per hour to £10 - the largest increase on record, marking the first step towards a single adult rate.
ACS chief executive James Lowman said, “Our members are grappling with how to afford this inflation-busting increase in wage costs. The market remains tough, with many retailers reporting flat or declining sales while expenses like banking charges, credit card processing fees and energy bills are eating away at their profitability.
"More than ever, we need help from the Chancellor in the Budget. Without sustained and enhanced help on business rates, a reduction in National Insurance Contributions, and effective incentives to drive investment, our sector faces a challenging future. For some communities, this could mean the viability of their local shop is put at risk.”
Evidence provided to the Low Pay Commission by ACS earlier this year already found that to handle the increases in national wage increases, 53 per cent of retailers have reduced the amount they invest in their business, 53 per cent have been forced to increase their prices in store, and 47 per cent have had to take lower profits.
Baroness Philippa Stroud, Chair of the Low Pay Commission (LPC), stated that data already shows signs of employers finding it harder to adapt to minimum wage increases.
A Rossendale shop has had a licence bid rejected after repeatedly selling vapes to children and having illegal products on its premises.
Management at the Ibra Superstore at 34 Burnley Road, Bacup, have shown ‘no regard’ for children’s protection and safety, and have insufficient controls for licensing, Rossendale councillors have ruled.
Ibrahim Mohammad, director of the Ibra Superstore, had recently applied to Rossendale Council for a new premises licence. But the borough’s licensing sub-committee rejected his bid after a meeting which heard allegations from the police and trading standards officers.
The Burnley Road shop has been subject to various licensing changes and concerns in recent years. In the past, it was called Bacup Wines.
Ibrahim Mohammad, the applicant, attended the Rossendale licensing sub-committe meeting with his father,Amin Mohammad. Also there was PC Mick Jones, of Lancashire Constabulary, and Jason Middleton of Lancashire Trading Standards. Councillor Bob Bauld attended as an observer.
Mr Mohammad wanted a premises license for alcohol sales and opening hours from 8am to 11pm, seven days a week. He already had a personal licence. He said the Bacup shop would install a CCTV system, keep an incident log and a refusals record, check customers’ ages, display information about staff and give them regular training.
Trading standards officer Jason Middleton said Ibra Superstore Ltd was incorporated as a company in April 2023. Since then, trading standards had received 11 complaints about under-age sales and carried out visits.
Breaches included non-compliant vapes being found which broke a 2ml limit on the quantity of nicotine-containing liquid, no age checks and no information on display.
During one visit, Amin Mohammad tried to leave with a bag containing 10 illegal vapes. In test purchases by trading standards, an ‘Elf Bar’ vape was sold to a 14-year-old by Amin Mohammad and an illegal Hayati Pro Max vape to a 13-year-old by Ibrahim Mohammad. The shop claimed a phone call distracted staff during the 13-year-old’s purchase and illegal vapes came from ‘a man in car’.
Councillors heard different speakers, looked at written reports and also some video footage from the applicant. But they rejected the premises licence bid.
Giving their reasons, they stated: “There was a repeated history and pattern of behaviour regarding under-age sales of age-restricted items, such as tobacco products and vapes to children. You must not sell vapes to anyone under the age of 18. This is a criminal offence which the council takes very seriously.
“It is clear you breached the law by failing a test purchase operation in which you sold an illegal vape to an under-age child. The sub-committee feels that you have no regard to the protection and safety of children.
“The sub-committee feels that there is insufficient management control at the premises. There is no credible system to prevent under-age sales of age-restricted products and no measures in place to avoid harm to children and to prevent crime and disorder
“Therefore, given the number of incidents, the circumstances surrounding the incidents and the fact that the matter involves safeguarding issues relating to young, vulnerable minors, we consider that the seriousness of the incidents and the crimes committed against young children undermines the licensing objectives to prevent crime and disorder, and protect children from harm.”
The shop has the right of appeal to a magistrates court within 21 days of the date of the notice.
SPAR North of England retailer Dara Singh Randhawa’s family store has been awarded £100,000 of free stock after hitting all his targets since moving to the symbol.
Dara and his family, who have their SPAR store in Patrington in the East Riding of Yorkshire, joined SPAR through its association with James Hall & Co. Ltd in August 2023 having taken the decision to maximise the store’s potential.
It is a decision they have not looked back on, with sales increasing by up to 25% and margins also showing significant uplift in the last 12 months.
Key to the store’s improved performance is the complete overhaul of products available in-store, particularly the fresh food range, to better support people who live in Patrington and the surrounding area.
A new store layout and refrigeration, better Food To Go and meal deal options, a coffee machine, and a Calippo slush machine were also installed during a major refurbishment prior to launch.
Dara said: “Our move to SPAR has been excellent. We have seen fantastic sales uplift and the support from the team at James Hall & Co. Ltd has been brilliant. The £100,000 of free stock is the cherry on the cake.
“We have been very impressed with the Price Locked promotions, in particular. These give customers confidence to do bigger shops with us as they see value on our shelves and the products at the same prices for longer.
“At times over the summer when tourists and visitors to the area add trade, we have seen sales £6,000 a week higher than our average. This is against a backdrop of the popular caravan park in the village being closed almost all year.
“We are really pleased with the position we are in, and we will be looking to achieve more in 2025.”
Peter Dodding, Sales Director at James Hall & Co. Ltd and Chairman of the SPAR Northern Guild, said: “Congratulations to Dara and the Randhawa family on hitting their targets and earning £100,000 of free stock.
“We recognise switching brand is a big decision for a retailer which is why this isn’t a gimmick, and we offer this to all retailers who join the SPAR family with James Hall & Co. Ltd.
“As well as our £100,000 incentive, we also offer retailers the chance to achieve up to an additional £5,000 of free stock if they successfully refer a friend.
“These opportunities provide additional motivation to retailers alongside the comprehensive benefits that joining the SPAR brand brings with it.”
James Hall & Co. Ltd is a fifth-generation family business which serves a network of independent SPAR retailers and company-owned SPAR stores across Northern England six days a week from its base at Bowland View in Preston.
The government has on Wednesday announced its acceptance of the Low Pay Commission’s (LPC) recommendations on the rates of the National Minimum Wage (NMW), including the National Living Wage (NLW).
The rates which will apply from 1 April 2025 are as follows:
NMW Rate
Increase (£)
Percentage increase
National Living Wage (21 and over)
£12.21
£0.77
6.7
18-20 Year Old Rate
£10.00
£1.40
16.3
16-17 Year Old Rate
£7.55
£1.15
18.0
Apprentice Rate
£7.55
£1.15
18.0
Accommodation Offset
£10.66
£0.67
6.7
The recommended NLW rate is expected to equal two-thirds of median earnings and to have the highest real value in the history of the UK’s minimum wage. The increase in the 18-20 Year Old Rate narrows the gap between that and the NLW, in anticipation of the adult rate being extended to 18 year olds in future years.
“The government have been clear about their ambitions for the National Minimum Wage and its importance in supporting workers’ living standards. At the same time, employers have had to deal with the adult rate rising over 20 per cent in two years, and the challenges that has created alongside other pressures to their cost base,” Baroness Philippa Stroud, chair of the LPC, said.
“It is our job to balance these considerations, ensuring the NLW provides a fair wage for the lowest-paid workers while taking account of economic factors. These rates secure a real-terms pay increase for the lowest-paid workers. Young workers will see substantial increases in their pay floor, making up some of the ground lost against the adult rate over time.”
Stroud admitted that the data show some signs of employers finding it harder to adapt to minimum wage increases.
“The tightening of the labour market since the pandemic has unwound, but the overall picture is similar to 2019. The economy is expected to grow over the next year, although productivity growth remains subdued,” she noted.
Business secretary Jonathan Reynolds said:
Good work and fair wages are in the interest of British business as much as British workers. This government is changing people’s lives for the better because we know that investing in the workforce leads to better productivity, better resilience and ultimately a stronger economy primed for growth.
The recommended increase in the 16-17 Year Old Rate restores that rate to its original value relative to the adult minimum wage. In line with previous recommendations, the Apprentice Rate will remain equal to the 16-17 Year Old Rate.