Nielsen Data Reflects Emerging E-Cig Leaders

blu, NJOY, Logic solidify their lead

Published in Tobacco E-News

By  Melissa Vonder Haar, Tobacco Editor

blu's multi-cartomizer starter kit

NEW YORK --Nielsen has released its findings for the electronic cigarette segment in the convenience store and expanded all outlets combined (XAOC) channels for the period ending Oct. 26, 2013. During this time, dollar sales grew by 118.1% to $41.1 million in the c-store channel and $11.3 million in the XAOC channel--although the numbers represented a slight deceleration in terms of growth, Wells Fargo analyst Bonnie Herzog said there is plenty to be positive about.

"[The Nielsen numbers] imply [about] $700 million annual sales in Nielsen-tracked channels," Herzog wrote in a research note. "We believe retail e-cig sales (including non-Nielsen tracked channels) should approach $1 billion this year or [about] $1.8 billion including online."

The Nielsen data further exemplified the dominance of Lorillard's blu: during the most recent period, blu boasted a 45.6% dollar share (up 40.1% from this time last year) and a 37.2% unit share in the c-store channel.

"We remain bullish on Lorillard as we see many growth drivers for both its cigarette and e-cigarette portfolios and continued industry-leading fundamentals," Herzog said.

Nielsen is also beginning to provide clarity on the top three--if not the top five--e-cigarette players in the c-store channel. In terms of dollar share, NJOY remained in second with 21.6% share, Logic in third at 17.8%, with 21st Century and Nicotek rounding out the top five (with 4.2% and 2.9% dollar shares,  respectively).

While blu was the clear leader for unit share as well, Logic moved into second place with a 19.8% share; NJOY (18.8%) was in third, followed by CB Distributors (7.1%) and Nicotek (4.7%).

Not surprisingly, blu was the leader in the XAOC channel (which includes the food, drug and mass channels) with a 49.8% dollar share and a 37.4% unit share. Other leading brands in this channel were FIN (15.1% dollar share, 15.9% unit share), Mistic (14.0%, 25.6%), NJOY (8.3%, 5.3%) and 21st Century (5.2%, 7.7%).

Though the top brands are beginning to emerge, Herzog predicts an emphasis on value-priced starter kits could cause the average cartomizer cost--currently at $6.15--to drop. Leading the charge are companies like blu, which sells a five-cartomizer kit for $34.99; R.J. Reynolds, whose Vuse 3 cartomizer kit will roll out nationally this fall at $29.99; and NJOY.

"Several leading brands are coming out with starter kits at attractive price points," Herzog said. "E-cig per-cartomizer cost should trend down over time due volume shift to multi-packs."