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Electronic Cigarette Category Review

ecigs

Electronic Cigarette category grows in 2014

Electronic cigarettes were the fastest growing product category in 2014 according to the latest data from Nielsen. The research company concluded that sales increased by 43.4 percent in 2014, to £122 million and predicted that sales would increase to £340 million by the end of 2015.

The Office for National Statistics has recognised the importance of electronic cigarettes in the marketplace by adding them to the basket of goods used to track consumer price inflation.

The rise of electronic cigarettes has affected the sales of alternative smoking cessation products, such as nicotine patches and gum, with sales dropping 6.1 percent in 2014.

Electronic cigarette sales will likely be boosted later in the year by tobacco counter display legislation; from 6 April 2015 it will be illegal for large stores to openly display tobacco products.

Product listings rise by 83.7 percent in a year

Brand View has reviewed the range of e-cigarette inhalators and starter kits available in Asda, Boots, Sainsbury’s, Superdrug, Tesco and Waitrose since 1 January 2014. As expected the number of inhalators and starter kits has increased significantly rising from 43 listings on 1 January 2014, to 79 listings on 25 March 2015 – an increase of 83.7 percent.

The biggest increase in the number of products was between the 13 August and 27 August when 13 additional products were sold. Asda added the most of any retailer during this period; listing six Vivid Vapour products. This steep increase in product listings at the end of August could be attributed to retailers preparing for Stoptober which encourages smokers to stop smoking for most of the month of October.

number of new ecig products

Introduction of new electronic cigarette brands

Since 1 January 2014, 45 e-cigarette inhalators and starter kits have been added and nine products delisted. Nicolites listed nine new products, the most of any brand; all were new listings in Superdrug, although not new to the market.

On 23 March 2014 Boots introduced an own label electronic cigarette, the Boots NicAssist 20 cartridge inhalator; it was the first of the six retailers to do so. It followed up this introduction a year later with a four cartridge alternative.

Five of the brands identified already had existing electronic cigarette products on sale. However, for Puritane, Superdrug own label, Vivid Vapour and Vype, these additions were the first products they introduced to the retailers we have reviewed.

new ecig by brand

Are tobacco sales falling with the growth of e-cigarettes?

With demand growing for electronic cigarettes, it might be expected that demand for regular cigarettes falls and potentially the number of products listed in major retailers drops. Looking at the six retailers we see that the total number of tobacco and tobacco related products has decreased 1.8 percent since 1 January.

The number of standard cigarette products fell 2 percent, but cigars saw the greatest decrease in the number of products listed with 10.8 percent. Henri Wintermans, Royal Dutch and Cafe Creme were the brands with the most products delisted.

In contrast to this, the number of rolling tobacco, rolling papers and filters products have increased since 1 January 2015.

tobacco sales falling

Electronic Cigarette category promotional activity

Advertising and promoting tobacco products to the public is prohibited, however e-cigarettes can be promoted as long as they adhere to a strict set of rules (cap.org.uk), some of which are listed below:

  • Adverts should not encourage non-smokers or non-nicotine users to use e-cigarettes
  • Adverts should not appeal to under 18’s and those depicted in the advert should not look under 25
  • The advert cannot contain any imagery or logo associated with a tobacco brand
  • Adverts cannot contain health or medicinal claims unless the product is authorised for those purposes by the Medicines & Healthcare products Regulatory Agency

Brand View has reviewed the promotional activity of six electronic cigarette brands since the start of 2014.

number ecig on promo

Nicolites had the greatest number of products on promotion in 2014, with peaks at the start of January, mid March and mid September. These peaks are likely targeted to take advantage of people hoping to give up tobacco smoking for a New Years resolution, Lent and Stoptober. E-lites promoted heavily during December 2014, perhaps targeting Christmas shoppers who are helping family and friends give up smoking, as well as those who are giving smoking as a New Years resolution. Nicorette and Vapestick also promoted heavily, but focused on Stoptober 2014 and January 2015.

Average depth of cut of electronic cigarette category

As well as having a large number of products on promotion, Nicolites also had the greatest average depth of cut with 36.8 percent. It was closely followed by Gamucci with an average depth of cut at 33.3 percent on promotions run in Waitrose.

average depth of cut ecig

How effective are retailers at selling electronic cigarettes online?

While supermarkets and health and beauty retailers dominate bricks and mortar sales of electronic cigarette items, there is more competition online with other retailers offering a wider range of devices and flavours.

With such stiff competition retailers have to ensure their online search capabilities are effective so shoppers can easily find their full e-cigarette range. Likewise, brand owners will want to ensure that their products return before competitors, in order to maximise potential sales.

Using Brand View Placement, part of the Brand View Positioning suite of products, we have analysed how products are returned if a shopper uses the search terms “electronic cigarette” and “electronic cigarettes” in Asda, Boots, Superdrug, Tesco and Waitrose.

The different search terms does not affect the number of results returned in Waitrose and Boots, returning 51 and 9 results respectively. However, no results are returned for either search term on the Superdrug website, despite stocking 14 electronic cigarette products.

electronic cig results

The nine results returned from the Boots website search contain six Puritane electronic cigarettes and three Heaven Fresh air purifiers. A shopper that has searched for “electronic cigarettes” is currently being presented with completely unrelated products on the first page of search results; this disrupts their shopping experience, and may result in a lost sale.
wrong results ecig

If a shopper searches for “electronic cigarettes” on Asda’s website as opposed to “electronic cigarette” 29 additional products are returned. This is because Asda’s search algorithm will look for products that contain the exact phrase “electronic cigarette”. Whereas when you search “electronic cigarettes” it will take you to the electronic cigarettes shelf page, or aisle as Asda call it, and return all products within it.

Vivid Vapour are affected the most by this search behaviour as nine additional products appear when you search “electronic cigarettes”. E-Lites are the second most affected brand with five additional electronic cigarettes returning.

don't return for e-cigarettes

It’s not just number of results returned that is affected, but also where they are returned. Using the Vivid Vapour Electronic Cigarette Starter Kit as an example, it is returned ninth out of nine results using the search term “electronic cigarette” but places third out of 38 using the search terms “electronic cigarettes”.
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Keeping up with shopper language

Retailers need to keep up-to-date with the words and terms that shoppers use, so that they can return relevant and expected results when a shopper searches for products. Searching for the popular term “e-cigarette” on the Waitrose website returns only one electronic cigarette product and 49 tobacco products. As the term “e-cigarette” becomes commonplace Waitrose will need to review and refine its search terms so that it returns more electronic cigarette products. If shoppers can easily locate the correct products, their shopping experience will be improved and sales will increase.

Similarly, retailers should consider a wide range of search terms, for instance, Superdrug’s electronic cigarette products only return for “e-cigarette” or “e cigarette” search queries. By including a variety of related search queries retailers will increase shopper satisfaction and maximise their sales potential.

What’s in store for the electronic cigarette category in 2015?

With the slow, steady decline of sales in the tobacco category witnessed throughout 2014 and a sharp rise in the sale of electronic cigarettes, there is no evidence to suggest this trend will stop. Shoppers will likely look to replace tobacco products with electronic cigarettes and the category will continue to grow.

Electronic cigarette product ranges expanded throughout 2014 and we expect to see further diversification within these ranges throughout 2015, including the introduction of more flavours to retailers current offerings.

As sales of alternative smoking cessation products fell in 2014, will we see retailers prioritising their key lines within this category and delisting poor performing lines, in favour of electronic cigarette products?

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