Claire Amber Young talks to some e-cigarette industry pioneers
SO, if e-cigarettes are appealing to increasing numbers of smokers, what’s in it for retailers and how can they make the best of the commercial opportunities? For Adrian Everett, CEO of E-Lites, electronic cigarettes, crucially, provide retailers with much greater profit margins than traditional tobacco products, and bring the promise of repeat business – as consumers come back to the store to top up on the replenishable parts of the system.
The E-Lites kit available to retailers includes a rechargeable battery and a nicotine filter, an etip, which screw together to make up the “cigarette”.
The battery can be charged with USB, wall and car connectors.
As the smoker inhales, the battery activates the heating element and converts nicotine to vapour.
The product is free from tobacco, tar and carbon monoxide and three styles are available, the regular E-Lite, a light version and menthol.
While there are different ways to present a nicotine vapour system, E-Lites is designed to be immediately recognisable as a cigarette replacement.
“It’s very much made with both the retailer and consumer in mind; we’ve tried to make the product as realistic as possible,” Everett said.
One E-lite set-up can last for between 30 to 40 cigarette-style “smokes”, which works out at around £2 for the equivalent of 20 cigarettes.
E-Lites aren’t disposable, so consumers have to come back and buy the refills, which Everett argues is good for repeat business and will provide increased footfall.
Sales do take some time to build but as an increasing number of people become aware that the shop stocks e-cigarettes, as people try them and tell others what they have found, and as customers return for more, the product quickly becomes an important part of the sales mix, he argued.
“We’ve found that within 12 weeks of starting to stock the product, E-Lites sales will account for between 5 and 10% of tobacco sales overall,” he said.
So, if a retailer brings in £2,000 a week in tobacco sales then after around three months of stocking the product, they will be taking around £200 a week from E-Lites. But the E-Lites sales will include a much larger margin for the store owner.
He suggested a retailer will make around 5% on tobacco sales (so about £100 on the £2000 sales per week). But he or she will make between 30% and 40% margin on E-Lites – so up to £80 on the £200 worth of sales.
E-Lites is aimed at smokers over the age of 18 who want to continue smoking but in a less harmful and less expensive, unrestricted way, Everett said.
“We offer something that’s physically like smoking. It’s so familiar and similar to smoking that we can’t claim to be trying to make you quit smoking.
“It’s wrong to be trying to medicinalise electronic cigarettes as they’re not a cessation product.”
He reckons UK retail sales for electronic cigarettes probably reached £40m in 2012 and expects the market to be worth between £120m and £200m by the end of 2013.
The company says E-Lites, which recently became the first e-cigarette brand to be advertised on British TV, has a 55% share of the market, but it’s adamant that it doesn’t want to entirely dominate the scene. “We want competitor brands to sit alongside us and to provide the consumer with choice,” he said.
• At one of those competitor brands, Nucig, there was a similar message on the health and medicines issue. Nucig managing director Kal Sohal, argued that there are many current cigarette users who simply want to “smoke” in a more responsible and healthier way.
Nucig electronic cigarettes are designed as an alternative to using cigarettes, aimed at smokers aged 18 and over and many find them hugely important, he suggested
“People see the products as life changers,” Sohal said.
“You don’t get the pollutants … but outwardly, they look like normal cigarettes.”
A range of kits are available. The Nucig trial kit, RRP £4.95, includes eight electronic cigarettes. If consumers like the product, they can go back to the store to get the mini kit, RRP £10.99, which includes a rechargeable battery (the white part of the cigarette), one filter and one USB charger.
And there’s a deluxe kit, RRP £58.99, which has similar hardware but has two batteries, one with an orange/red “flame” and one with a blue neon “flame” – the option for public areas where tobacco smoking is banned. The kit also has a three-pin plug and portable charging case – a box that carries the “cigarettes” and doubles up as a charger.
Nucig filters are available in different strengths.
Kits are now available in Londis and Costcutter stores and a selection of independent stores.
According to Sohal, the mini kits are the most popular product for convenience stores, partly because they require less counter space than the other products.
He said the firm saw a big spike in sales of Nucig in the run-up to Christmas but predicts sales will increase through 2013.
And that he claims will be especially good for retailers who jump on the e-cigarette train.
“For each pack a retailer sells, they can afford to buy two more packs from us,” he said. “It’s a very lucrative product for retailers to stock.”
• At e-cigarette firm Skycig variety is an important part of the product and the service. Its electronic cigarette refills are now offered in three different strengths. And it offers seven flavours that smokers can choose from including: Classic Tobacco, designed to have flavour elements of Virginia tobacco; Tobacco Gold, closer to a rich American style; Crown Tobacco, said to feature undertones of sweet mocha, Crown Menthol, Crown Cherry and Crown Vanilla.
• Foster’s Distributors has launched a new range of disposable e-cigarettes, called eKarma.
There are three styles – regular, light and menthol and as all are disposable, no charger is required. Each e-cigarette is said to give the user an equivalent of over 40 “smokes”.
E-Karma has an RRP of £4.99 and is packed 12 to a display outer.
Foster’s managing director, Andrew Armstrong said: “I am 100% confident that eKarma is the best product in the market today. It looks and weighs more authentic, more like a like a real cigarette than its peers.
“Benefits to retailers extend way beyond fabulous profit margins; product reliability is second-to-none and is proven by a very low level of returns in the USA,” he said.
One E-Lites set-up provides for between 30 and 40 cigarette-style “smokes”, which works out at around £2 for the equivalent of 20 cigarettes for the consumer while delivering high margins for the retailer, he added.
• Retailers are being offered a new point of sale merchandising kit from UK e-cigarette brand Freshcig.
The firm said it developed the new PoS kit to help retailers build e-cigarette sales ahead of legally enforced changes to the merchandising of traditional cigarettes.
The firm claims sales of electronic cigarettes have increased dramatically in the past four years and are expected to be used by over one million people in 2013.
The retailer pack consists of nine Freshcig ecopack electronic cigarette starter kits and nine Freshcig disposable electronic cigarettes.
A QR code on the back of the packaging allows retailers to replenish stock by scanning it with a smartphone and placing an order on the Freshcig website.
• The new Nicolite disposable is a lifelike electronic cigarette that comes in menthol and tobacco flavours.
The firm says it’s a fully disposable, non-flammable electronic device that provides smokers with a safer alternative to ordinary cigarettes.
