By Pascal Culverhouse
It is difficult to predict the long-term effects that the Tobacco Products Directive (TPD), which came into force last week, will have on the vaping industry as a whole but, with a general election imminent and the fallout from Brexit on the horizon, can the rapid growth the e-cigarette market has enjoyed continue?
Adapting to change is an essential part of developing a successful business. However, large changes can leave lasting damage to some companies, or even stop them dead. With industry giants VIP going into administration and NJOY declaring bankruptcy last year, does this leave room for the smaller vape producers? Will the independent vape shop continue to rise in popularity? Or will heavy regulation change the way business is conducted?
Statistics show us that in 2015, 79% of e-cigarette users bought their devices from physical stores, most commonly from a specialist vape shop. At the start of 2017, there were 1,700 independent specialist retailers of e-cigarette products, with 800 opening in 2016 alone.
Considered by some to be the biggest retailing success of recent years, the specialist vape shop has triumphed not only because of the increased popularity of vaping, but also because of the culture. Buying a vape pen for the first time can be a confusing affair, with so many brands and varieties available. E-cigs come in all shapes and sizes. Disposable e-cigs are convenient but less advanced, while high-end box mods like the Innokin Cool Fire 4 come with all the latest technology. Choosing how and where to invest, therefore, is rarely simple.
Independent vaping shops are often run by vapers themselves, who possess superb knowledge of all of their products. It’s this experienced customer service that has helped in the boom of the e-cigarette retailer — but they have also added to the culture of vaping. Those who no longer vape to quit smoking often invest more heavily into the vaping “lifestyle”.
Vape stores offer people the opportunity to vape socially, as well as selling nicotine base which is used to dilute and mix flavours to make vaping cheaper. They also give people a chance to try the latest tech (with the e-cigarette industry constantly evolving), generating a strong repeat customer clientele.
But big changes are about to impact the UK; not just for the vaping industry, but for every member of the public, too. With this in mind, can this “cottage” industry continue to grow?
The new regulations from the TPD are about to seriously constrict the vaping community. It faces two major challenges: to retain existing vapers whose lifestyle has been limited and to continue to gain customers who are new to vaping. Not only that, but many the Great British public still feels that vaping is still not yet a wholly desirable alternative to cigarettes. With only a third of tobacco smokers having ever tried an e-cigarette, the rise in those who use e-cigarettes has reportedly “peaked”.
So if new vapers are becoming less common, where does the TPD leave those who are already keen vapers? Unfortunately, much of the more “specialist” products have become seriously limited. Any e-liquid that contains nicotine cannot be sold in a volume of more than 10ml, while e-cigarette tank capacity has been reduced to 2ml (the previous average was around 5ml). Those who enjoyed mixing their own e-juice and creating giant clouds will now have to carry around extra refills of e-liquid to maintain their vaping style.
Ultimately, there is going to be an increased cost for both customers and manufacturers. Unfortunately, this could result in DIY vape kits, or unregulated products being ordered from outside of Europe to keep costs down. While the entry-level vaper will only see their e-cigarettes rise in price a little, the current vaping culture (which vape shops are at the heart of) will be forced to adapt.
Looking to the Future
With Brexit looming over the UK and leaving a lot of question marks about the future of its economy, there is a lot of uncertainty for vape shops right now. Another factor will be the growth of eCommerce and how that could affect the UK high street. Might specialist shops become an online-only affair? At Electric Tobacconist, we’ve only ever sold online. We feel it better suits our business and our customers. But we started from a small warehouse near Hemel Hempstead, opening a retail outlet would have been difficult in rural England.
The general election in June might further shake up the industry, with the Labour party promising to invest heavily in the National Health Service, we might see a rise in tobacco smokers being recommended e-cigarettes by their doctor. While this might help to reduce the negative stigma around e-cigarettes, it might also increase the interest in the e-cigarette market from large tobacco companies.
We hope that independent vape shops continue to thrive across the UK. Vaping has created a strong grassroots following of people who are interested in the innovative design and development of e-cigarettes. For many, they are not just a healthier way to ingest nicotine, but a lifestyle choice — one which vape shops have been instrumental in the development of. It would be a shame to see these stores, social spaces and places of innovation forced to shut up shop.
Pascal Culverhouse is founder and CEO of Electric Tobacconist. Starting out in 2013 as a small company, within 18 months, the company had achieved a seven-figure turnover.