The vape category continues to cope with regulatory shifts, including ongoing premarket tobacco product application (PMTA) uncertainty. While some retailers are bullish on the category, recent data from Circana highlights challenges for the segment.
Between April 23, 2022, and April 23, 2023, electronic smoking devices — including e-cigarettes, vape kits and mods, for example — generated nearly $7 billion in sales for U.S. convenience stores nationwide, per Circana. The market research firm also noted the segment grew in dollar sales by 4.5% for that same 52-week period.
However, the data reveals more recent slough-offs in both dollar and unit sales. For the 12-week period ending on April 23, year-over-year dollar sales fell by 3.5%, and in a four-week review, the electronic smoking device subcategory registered a loss of 5.1%. Unit sales posted declines of 15.6% and 17% for the respective periods.
That’s a national overview. Some c-store businesses report more optimistic trends on the local level.
“Vape continues to be a strong category for us,” said Nathan Arnold, director of marketing for Englefield Oil Co. “Our vape customers see us as a destination for their vape products, but also for the other products that help to fuel their day. We continue to see basket building with this category, and promotional opportunities with brands have increased.”
Headquartered in Heath, Ohio, Englefield Oil operates 119 Duchess c-stores, along with fast food franchises, commercial stations and bulk warehouses.
“We continue to be optimistic about the vapor category as it continues to perform at a high level with support at all levels from manufacturers to consumers. Same-store sales are up 23% over a year ago as manufacturers continue aggressive pricing and promotional programs, which have been well received by consumers,” said Tim Greene, category director for general merchandise and tobacco at Smoker Friendly. The company includes more than 150 retail outlets, including c-stores in seven states, along with an estimated 800 licensed independent retailers in 38 states.
Elsewhere, nicotine category managers relayed less positive anecdotes. Respondents to the Goldman Sachs “Q1 Nicotine Nuggets” survey, which questioned approximately 65,000 retail locations, expressed ongoing concerns regarding the fallout from flavored tobacco bans and negative media attention on JUUL. Additionally, they stated promotional activity remains consistent from the end of 2022 into the first few months of this year.
Bright Spots
Other comments indicated sales of disposable vape products are in growth mode compared with other models within the subcategory. Of course, that feedback reflects the fact that disposable e-cigarettes were exempted from the Food and Drug Administration’s (FDA) 2020 ban on flavored vape products.
Currently, VUSE Alto reigns as the segment’s leader. Goldman Sachs, using data from NielsenIQ, reported VUSE sales for the 52 weeks ending April 8 totaled more than $2.1 billion from all retail channels, representing a 36.8% gain in dollar sales. Volume increased by more than 11% for the same 52-week period.
Also working in the brand’s favor is the fact that several non-menthol VUSE products have been among the 23 products to receive marketing granted orders from the FDA, out of the millions of PMTAs submitted. NJOY and Logic are two more brands that had specific products make it through the process.
In fact, some Nicotine Nuggets participants expressed positive anticipation for a renewed consumer interest in NJOY now that Altria has acquired the brand.
Shifts Continue
However, it should be noted that states continue to pursue stricter regulations for this other tobacco product segment to further curtail underage usage.
“A concern in vape, and the entire tobacco category, is the constant change in federal, state and local laws. Flavor bans, menthol bans and other law considerations make it challenging,” Arnold admitted.
Greene agreed. “As we continue to support the category, we know things can change at any moment. We also continue to lead a grassroots fight against flavor bans and increased tax regulations at local and state levels so we can provide products that meet our customers’ needs.”
