Industry Insights: e-Cigs
The electronic cigarettes category is growing rapidly, with industry experts projecting $1.7B category sales at retail in 2013. There will be jockeying for market leadership position among the earlier entrants such as Lorillard’s blu and NJOY; the more recent entrants from the remaining Big Tobacco manufacturers, Reynolds American’s Vuse and Altria’s MarkTen; and among smaller, entrepreneurial manufacturers. According to independent store level data from Management Science Associates, the top 7 brands account for over 80% of e-Cig equivalent unit volume, with Lorillard’s blu dominating with 45 share based on year-to-date volume through August 2013.
However, the size and market leaders of this innovative category could be influenced by any of the following factors:
- Food and Drug Administration’s (FDA) Center for Tobacco Products possible regulation of this innovative category. Regulation could place limits on:
- flavors, variety or strengths
- online sales
- minimum legal age to purchase
- standards for television, radio and print advertising
- Potential for increased taxation at the state and local level
- Possible local ordinances restricting consumer usage in public
- Consumer perceptions:
- acceptance or rejection around the safety of electronic cigarettes versus traditional tobacco
- acceptance or rejection of electronic cigarettes as a device to reduce usage of traditional cigarettes
- Consumer awareness, trial and long-term category acceptance, as indicated by high depth of repeat, as a complementary or replacement product to traditional tobacco and/or as an alternative smoking reduction/cessation product
The manufacturers who are best able to navigate through these market influences and deliver the products that satisfy consumers’ needs will have the greatest potential to benefit from this emergent category.