Wells Fargo examines electronic cigarette market leaders.
In the electronic cigarette segment, Reynolds American Inc. (RAI) quickly hit the No. 1 dollar share position in the c-store channel, with Lorillard falling to the No. 2 position, followed by Logic and Altria (MO), Wells Fargo Securities LLC reported, citing Nielsen data for the period ended Sept. 27, 2014. Electronic cigarette c-store dollar sales few +14%, following five periods of declines, driven by 44% unit growth, which was partially offset by a -21% net pricing decline.
“Though pricing remains negative for the tenth consecutive period, we believe that is at least partially due to difficulty in capturing/measuring the different SKUs given the rapidly evolving vapor category and proliferation of vapors/tanks/mods (VTM) and e-cig/VTM refills, which tend to have a lower retail price/refill. As we expected, category dollar sales have re-accelerated, driven by RAI’s and MO’s national rollouts and we believe the trial and awareness generated by Vuse and MarkTen should help elevate the entire vapor category and drive incremental trial,” noted Bonnie Herzog, managing director, beverage, tobacco and convenience research for Wells Fargo.
“We were impressed and somewhat surprised that RAI took the No. 1 dollar share spot in the c-store channel with 28.8% share (though Vuse’s avg. eq. price was 22% below category average, due to heavy couponing, which likely explains the fast growth). We are somewhat skeptical of RAI’s No. 1 unit share given Vuse is in 35K outlets compared to more than 100K for blu. Blu slipped to No. 2 in dollar share with 25.4% share while Logic was No. 3 with 19.3% and MO lost share for the third consecutive period to 10.1%,” Herzog noted.
RAI is also No. 1 in terms of unit share with 36.7%, followed by Logic (18.7%), Lorillard (16.8%) and MO (10.1%). Lorillard continues to lead the take-home channel with 40.2% dollar share. Other leading firms in XAOC were Mistic (20% share) and NJOY (6.5% share), Herzog pointed out.