All change in vape, but not too dramatically!

As the Tobacco and Vapes Bill moves through Parliament, the UK convenience retail sector finds itself at a pivotal moment in the evolution of age-restricted product categories. Coupled with the upcoming ban on disposable vapes from 1 June, this legislation is set to place businesses under even greater scrutiny.

According to Ed Heaver, co-founder and CEO of Serve Legal, these changes present both challenges and opportunities for businesses prepared to adapt.

“2025 is a make-or-break year for retailers in the tobacco and vape industries,” he says. “Retailers will need to navigate a rapidly changing regulatory environment while maintaining customer trust.”

While tighter regulations are set to reshape the market, they also highlight the critical role that vape and next-generation nicotine products – such as heated tobacco and nicotine pouches – play in supporting smokers on their journey to quit.

Vape products are displayed for sale on October 27, 2024 in London, England Photo by Alishia Abodunde/Getty Images

With the Office for Health Improvement and Disparities (previously Public Health England) endorsing vaping as at least 95 per cent less harmful than smoking, the stakes have never been higher. Retailers now have the unique opportunity to champion products that deliver both public health benefits and impressive commercial returns.

Convenience stores can capitalise on this vibrant category by leveraging the latest product innovations, attractive margins, and proven harm-reduction benefits to drive growth and make a lasting difference in the lives of their customers. The message is clear: now is the time to lead the charge in promoting vape and next-gen alternatives as the smarter choice for smokers looking to quit.

The commercial edge

Smoking prevalence has been on a consistent decline in the UK, reaching a record low of 11.9 per cent in 2023 among adults. Conversely, vaping prevalence has been rising. In 2021, approximately 6.9 per cent to 7.1 per cent of adults in England were vapers, equating to around 3.1 to 3.2 million individuals. By 2023, this figure increased to 9.8 per cent of adults aged 16 and over, indicating a growing acceptance of vaping products.

The shift from tobacco to vape and next-generation nicotine products is delivering tangible benefits to UK convenience stores, with profitability emerging as a standout advantage.

According to research from the University of Edinburgh, vaping products now generate profit margins averaging 37.1 per cent, compared to just 8.5 per cent for traditional tobacco products (in September 2022). For retailers, this means that vape sales are four times more profitable than tobacco – a compelling case for prioritising this category.

A selection of disposable vapes with bright and colourful packaging are seen in a convenience store, on January 29, 2024 in London, England. Photo by Leon Neal/Getty Images

While tobacco once drove footfall and revenue, its importance has steadily diminished over the past decade. Transactions involving tobacco have dropped from 21 per cent in 2015 to just 12.8 per cent in 2022. Contributing factors include regulatory changes such as minimum pack sizes, standard packaging, and marketing restrictions, alongside declining smoking rates.

In contrast, the vape category has experienced explosive growth, with the average weekly number of transactions per store which included vapes rising from 10 in 2019 to 93 in 2022 – a ninefold increase in just three years.

This surge in vape sales translates into significant commercial gains. Despite fewer transactions compared to tobacco, the higher margins of vape products mean they now contribute nearly 73.4 per cent of the gross profits generated by tobacco. With ongoing growth, these figures underscore the potential for vape and next-gen products to not only fill the revenue gap left by declining tobacco sales but also drive profitability to new heights.

“Tobacco is yesterday’s product,” Hazel Cheeseman, chief executive of health charity Action on Smoking and Health (ASH), comments.

“The reduction in sales benefits both the nation’s health and convenience stores who make dwindling profits from selling tobacco. At the same time vape sales have surged, and this is much more profitable for retailers.”

The data speaks for itself – vape and next-gen categories are the future of age-restricted products in convenience retail. By embracing this shift, retailers can tap into a vibrant, profitable market that not only aligns with public health goals but also secures their commercial success.

Shifting to sustainability

The disposable vape market, once a cornerstone of vaping sales in convenience stores, is on the brink of transformation. With the ban on disposable vapes set to take effect in June this year across the UK, retailers should now start preparing for the transition. The ban, aimed at protecting children’s health and addressing environmental concerns, will reshape the landscape, pushing consumers and retailers alike toward reusable alternatives.

Disposable vapes have been a key driver of market growth in recent years, with usage soaring from 2.3 per cent of vapers in 2021 to a peak of 31 per cent by 2023, as per the annual Smokefree GB survey by ASH. Despite a slight stabilisation, they still represented 30 per cent of vapers' primary devices in the 2024 survey, published in August.

However, this trend is now reversing as regulations come into play and consumer preferences shift. Among younger adults (18–24), disposable vapes were the preferred choice for more than half of users in 2023 (57 per cent), but their popularity has started to decline, particularly among the 25–34 age group, where usage dropped from 47 per cent in 2023 to 29 per cent in 2024.

Retailers like David Wyatt and Nikesh Patel are proactively leading this change by promoting reusable systems such as pre-filled pods and high puff-count devices.

Wyatt’s Crawley-based Costcutter-Bargain Booze store is an example of how strategic adjustments can sustain sales amidst market shifts. By transitioning to reusable systems and collaborating with brands like Liberty Flights, Wyatt generated £120,000 in vape sales over five months in 2024. Similarly, Patel has expanded display space for pod-based systems, which are proving popular with customers seeking cost-effective and environmentally friendly options.

The rise of reusable vapes, prefilled pods, and heated tobacco products marks a significant transformation in the vaping market.

Products like the Elfa Pod system, which uses pre-filled e-liquid pods, are emerging as good candidates to replace disposables. The 4-in-1 systems from leading disposable brands are already performing exceptionally well. With flavours remaining a key driver of customer preference, the 4-in-1 prefilled pod kits also offer multiple flavours in a single device. These rechargeable devices bridge the gap between single-use convenience and reusable sustainability.

Sales trends also show a growing preference for high puff count devices, such as Elfbar’s AF5000 and Lost Mary’s BM6000, which are both cost-effective and sustainable. These reusable systems hold more e-liquid than disposables, making them an attractive option for budget-conscious customers.

Imperial Brands has joined the reusable revolution with its newly launched blu bar kit, a sleek, lightweight vaping device offering up to 1,000 puffs per pod. Designed to bridge the gap between disposables and reusable systems, the blu bar Kit provides convenience, style, and sustainability.

The device features a rechargeable 550mAh battery, USB-C charging, and enhanced safety through a security lock. A translucent pod design enables users to monitor e-liquid levels easily, while the innovative mesh coil delivers intensified flavours, including Cherry, Pineapple, Blueberry Sour Razz, and Watermelon Ice.

“To give consumers choice as they seek out compliant devices, even ahead of the expected ban, retailers should also stock pod systems,” suggests Andrew Malm, UK market manager at Imperial Brands. “Our new blu bar kit, for instance, is becoming a popular option. The rechargeable vaping device uses replaceable pods to deliver a market-leading 1,000 puffs [average] of intense flavour per pod.”

Growth through innovation

With the vape market in the UK seeing a surge in the popularity of 2 ml + 10 ml products, ICCPP Group, the parent company of Voopoo, has introduced their latest innovation Argusbar Prime in the UK.

The sleek and modern design of Argusbar Prime not only enhances its aesthetic appeal but also makes it comfortable to hold and use. Besides, it boasts a range of features, including up to 6000 puffs, adjustable airflow, fast charging, detachable battery, and battery Indicator. The product offers a diverse range of flavours to choose from, catering to every palate.

Meanwhile, Philip Morris Limited, the UK and Ireland affiliate of Philip Morris International (PMI), has expanded its smoke-free portfolio in the UK, launching the closed pod vape product Veev One in August last year.

As the latest innovation in PMI’s Veev e-vapor range, Veev One features advanced heating technology and premium e-liquids made from high-quality nicotine and food-grade flavourings, ensuring a consistent taste experience.

Since its launch in 2023, Veev One has emerged as the number one closed pod vape system in Italy and Czechia.

“We’re excited to introduce Veev One to the UK market at such a transformative time for the e-cigarette industry,” John Rennie, commercial director at PML, has said at the time of launch. “The closed systems market has grown 35 per cent since January, with millions of adult smokers and nicotine users seeking new alternatives.

“As the UK market evolves, Veev One stands out as a premium, responsible, and recyclable, e-cigarette, with proven success across Europe.”

Differentiating itself from traditional devices, Veev One utilises a compact ceramic heating technology that delivers consistent taste and a low-level e-liquid detection system, designed to keep flavour alive by preventing a burnt taste. With no refilling or cleaning required, a rechargeable battery, and up to 1000 puffs per 2ml pod, Veev One offers users a hassle-free, reliable, and long-lasting vaping experience.

Veev One launched in the UK with a recycling programme, rewarding consumers for returning pods and devices for recycling and responsible disposal free of charge. Participants receive a £5 reward toward their next purchase from the IQOS online store.

Heated tobacco: A growing opportunity

The heated tobacco market has matured significantly over the past decade, led by trailblazing innovations like PMI’s IQOS and Japan Tobacco International's (JTI) Ploom series. These devices offer a unique alternative to traditional smoking and vaping by heating treated tobacco without igniting it, thus eliminating most harmful chemicals associated with cigarette smoke.

PMI recently celebrated the tenth anniversary of its IQOS device. While the initial rollout of heat-not-burn technology was deliberate and targeted, its adoption has steadily increased as availability expanded. Today, heated tobacco is a mainstream category, particularly popular among ex-smokers who enjoy the authentic taste of tobacco without the health risks of combustion.

The IQOS system has been instrumental in PMI’s vision for a smoke-free future. “With the debut of IQOS, we launched PMI’s vision of a smoke-free company, creating an opportunity to solve the problem of smoking,” PMI chief executive Jacek Olczak said.

This vision has translated into significant global success, with IQOS now available in over 70 markets, serving an estimated 30.8 million users and contributing over £8 billion to PMI’s annual revenues.

In Japan, where IQOS first launched in 2014, cigarette smoking prevalence dropped by 46 per cent, from 19.6 per cent in 2014 to 10.6 per cent in 2022. This decline aligns with the widespread adoption of heated tobacco products, showcasing their potential to drive public health improvements.

JTI has been another key player in the heated tobacco space. The recent launch of the Ploom X Advanced device introduced an optimised HeatFlow system for enhanced vapour volume and faster charging capabilities, taking less than 90 minutes to fully recharge. These upgrades, combined with improved EVO tobacco stick flavours like Bronze, Amber, and the new Gold variant, have propelled the brand to new heights.

“The brand has gone from strength to strength with device sales doubling and EVO tobacco stick sales tripling year on year,” said Mark McGuinness, marketing director at JTI UK.

This momentum was further validated when Ploom X Advanced won the prestigious Product of the Year Award 2024, with research showing that 86 per cent of shoppers are more likely to purchase products recognised with such accolades.

"With the heated tobacco category continuing to grow at a rapid rate, this award shows not only the success of our product, but the clear consumer interest in the category and Ploom,” McGuinness added.

Nic pouch potential

The nicotine pouch market in the UK is experiencing remarkable growth, emerging as a key player in the next-generation nicotine category. Valued at nearly £118 million in annual retail sales, excluding online, the category has seen an impressive 88 per cent year-on-year volume growth, reflecting its increasing consumer demand [IRI, September 2024]. While supermarkets currently dominate sales, the convenience channel is rapidly gaining ground, offering significant opportunities for independent retailers.

“There’s no doubt UK nicotine pouch sales are really taking off now, Prianka Jhingan, head of marketing at Scandinavian Tobacco Group (STG) UK, says. “Although supermarkets have the biggest share, sales in the convenience channel are rising fast.”

STG launched its XQS nicotine pouches last year, joining big players such as PML (Zyn), BAT (VELO) and JTI (Nordic Spirit).

The primary motivator for nicotine pouch users is flavour, with mint remaining the predominant choice. However, fruity options are also gaining traction, Jhingan notes, asking retailers to stock a diverse range of flavours to cater to their diverse customer base.

“It’s also worth noting that nicotine pouches tend to be consumed by a mix of customers,” she explains. “Almost certainly the largest group will be transitioning smokers who are moving away from tobacco and into the next gen nicotine category. But there are also other groups who enjoy nicotine pouches too, whether they are young urban professionals, trend setters or more socially-conscious young adults.”

“For XQS, we believe our sweet spot is targeting young urban professionals and trendsetters who are existing pouch users and value taste, quality and are willing to try new and innovative brands,” Jhingan adds.

With the upcoming disposable vape ban, nicotine pouches are expected to attract even more consumers seeking discreet, easy-to-use alternatives.

“Independent retailers should be talking to their customers now about the incoming ban as they may not be aware and point them in the direction of suitable alternatives like pouches,” she suggests.

“And remember nicotine pouches offer attractive profit margins in general, but I’m pleased to confirm that XQS in particular offers one of the highest margins of all pouch brands, which is yet another reason to ensure you are well-stocked.”

The right mix

Jhingan advises to stock a balance of established and emerging brands as they bring “excitement and interest” to the category. XQS, despite being a relatively new entrant since its launch in May 2024, has already secured its place as the sixth-largest pouch brand in the market.

“We really believe in this brand and think it genuinely brings something different to the market, and that’s for two specific reasons,” she says.

“Firstly, and most importantly, XQS is all about high quality and long-lasting flavour which we feel confident is better than the other brands out there. We know once consumers try it, they love it! Secondly, it would be the uniquely smaller sized pouches which ensure a perfect and delicate fit under the lip. XQS currently comes in four great flavours with further additions to the range likely.”

Merchandising plays a critical role in driving sales. As a newer product, Jhingan suggests XQS would benefit from being displayed in multiple locations in store to maximise visibility. STG UK provides three display solutions tailored to different store layouts, ensuring retailers can optimise space and attract consumer attention.

“There’ll always be a good percentage of consumers who are shopping the nicotine category by price and looking for the cheapest option, so make sure you are highlighting the cheaper brands in-store,” she adds. XQS, for instance, offers an RRP of just £5.50, making it one of the most affordable brands available.

The year 2025 promises further excitement for XQS, with new products and campaigns on the horizon. Jhingan concludes, “2025 is undoubtedly going to be another exciting year for XQS with lots of exciting news to come in the near future, so watch this space!”

A year of two halves

As 2025 unfolds, retailers face a two-fold challenge: meeting current demand for single-use vapes while preparing for the significant shift in consumer preferences post-ban.

“The year will be a game of two halves for retailers,” Heaver notes. “Retailers who are ahead of the curve, offering sustainable alternatives like refillable options, and sturdy compliance checks in place will be in a stronger position.”

“On the flip side,” he adds, “those who aren’t prepared for this transition could face challenges. The start of the year is about meeting the current demand, but by the end, it’s all about adapting to new regulations and consumer preferences. It's going to be a big shift.”

The introduction of these measures marks a critical time for the industry, but it also offers opportunities for forward-thinking retailers. “It’s going to be a tough year for businesses to stay ahead, but those who embrace these changes as an opportunity to lead with responsibility will be the ones to thrive,” says Heaver.

By staying compliant, embracing innovation, and responding to shifting consumer needs, retailers can navigate the challenges of 2025 and position themselves as leaders in the evolving vape and next gen market.