Convenience Store News - May 2018 - 62

TOBACCO

Mixed Messages in Vapor
Vaporizers are soaring in the convenience channel, yet e-liquids
have taken a hit By Melissa Kress
in the tobacco pool less than
10 years ago, vapor products hit some rough waves a
couple of years ago. Now, by all accounts, the numbers
are pointing to a comeback and convenience stores play
an important role in this segment.

AFTER MAKING A BIG SPLASH

What had many scratching their heads, though, were the
year-over-year figures showing that vaporizer volume
skyrocketed by 497.4 percent, but e-liquid volume dropped
55.6 percent.
In overall nicotine share, vapor volume grew nearly 24 percent.

Convenience and gas locations account for 56 percent of
all brick-and-mortar stores in the United States. However,
they account for a whopping 70 percent of the nicotine
volume in the nation. Tobacco outlets make up 3 percent of
the U.S. store count and 8 percent of the nicotine volume.
So, more than three-quarters of the volume is split between
only two channels, according to Don Burke, senior vice
president of Management Science Associates (MSA), a
provider of data management, integration and analysis.
"Clearly, tobacco outlets and the convenience channel are
very important to the category," Burke said during the Industry Outlook presentation at this year's Tobacco Plus Expo.
While the convenience channel is still known for cigarettes - its "cokes and smokes" moniker came about for
a reason, after all - other tobacco products have been
steadily carving out a place on the industry's backbars,
including vapor products.

Vapor by the Numbers
Citing data from the third quarter of 2017, Burke noted that
the majority of products in the vapor segment showed
year-over-year volume growth. Cartridges rose 24 percent,
kits rose 35.3 percent, and disposables held pretty steady at a 0.3-percent decline.

Do the Numbers Translate?
The numbers are one thing on paper, but do they reflect
what is really going on inside the stores?
Jonathan White, marketing director for Spark Industries
LLC, said the company's brands are pretty much in step
with the industry data. Sales of the Camarillo, Calif.-based
company's original Cig2o e-Cigarette Kits and refill cartomizers are up more than 30 percent from last year, he said,
adding that its Cig2o cartridge products are also up and
growing steadily.
"We recently relaunched our disposable line and are
regaining ground," White explained. "Disposables are
tough for retailers."
The MSA numbers on e-liquids, however, do not jive with
what Spark Industries is seeing in its own business.
"Counter to reported MSA sales trends, our Vapage brand
and Cig2o brand of 15-milliliter and 10-milliliter e-liquids
continue to get new convenience placement and sales," the
marketing executive reported.
The Cig2o brand - which has been on the market since
early 2009 - has built up a good adult consumer base
and "developed and earned some brand recognition and
equity over the years," White added.
Meanwhile at Fontem US, the parent company of
Charlotte, N.C.-based blu, Wayne Jones, senior vice
president of sales operations, said pod-based refills are
currently driving the vapor segment in U.S. convenience stores.
Jones also noted that disposables are showing a
decline in dollar sales, down 7.7 percent. While blu
disposables are registering a 7.9-percent increase
in convenience dollar sales, the overall decline in
disposables is being led, in part, by Logic exiting
disposables, he said.

Econ 101
Still, the Fontem US executive told Convenience
Store News he can understand why e-liquid sales,
in general, may be dropping off in the convenience channel.
"Simply stated: too much supply and too little
demand," he said. "In hindsight, the convenience

62 Convenience Store News C S N E W S . c o m


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