Not even a decade old, electronic cigarettes have made quite a splash in the $50 billion per year smoking industry. Vapor smoking appeals to smokers by offering users a healthier, more cost-efficient, and environmentally conscious alternative to traditional tobacco cigarettes.
Electronic cigarettes sidestep the problems of secondhand smoke, odor, and pollution from traditional cigarettes by using a battery-powered cartomizer to vaporize liquid nicotine. As a result, there is no combustible element and all that is released is harmless odorless water vapor. Many smokers are noticing the benefits of switching to electronic cigarettes, and the growing trend has caught the attention of the medical and smoking community alike, as each seeks to figure out what the real future of vapor smoking will be.
In 2010, an article in Journal Watch Pediatrics and Adolescent Medicine said that recent interest in electronic cigarettes was a “fad that is sweeping the U.S.” Similar comments have been made by medical and tobacco communities, portraying vapor smoking as a short-term trend without any long-term stake in the market, that is, until a Bisresearch research revealed that electronic cigarettes may be here to stay after all.
The “Bisresearch” Electronic Cigarette & E Vapor (Vaporizer) Market Research Reports in 2016 and sent ripples throughout the smoking industry with its prediction that the electronic cigarette market will quadruple in size in the next four years. The finding was based on a survey sent out to over 30,000 tobacco retailers and wholesalers, who responded to questions about their thoughts concerning whether electronic cigarettes had a future, and if so, where it was headed.
The results of the study were broken into four conclusions:
Electronic cigarettes are more than just a fad
Nearly ¾ of survey respondents (retailers and wholesalers in the tobacco industry) believe that vapor smoking is not merely a fad, but here to stay. One retailer commented, “New products. New technology. Better consumer knowledge. Anticipated reduced retails. All these points should fuel the growth.”
Over a third of respondents predicted the annual growth rate of the new niche industry at 40% or more.
A big contributor to this widespread confidence in the future of vapor smoking is recent interest from large tobacco companies, who are racing to stake a claim in electronic cigarettes. Forbes commented on this burgeoning market by saying, “The fact is that non-burning, electronic nicotine delivery systems are worthy of some attention…What sets e-cigarettes apart from other non-traditional nicotine supply systems is that it has a very higher conversion rate compare to regular cigarettes.”
Forbes cites a government survey that concluded in 2016 that 3.7% of American adults had tried vapor smoking, up from 0.6% just one year earlier, a 350% growth rate.
Numbers like these, Forbes says, “…are the kind of statistics that potential trends are made of.” The Bisresearch research compared the electronic cigarette industry to energy drinks, saying, “We think e-cigs are to tobacco what energy drinks are to beverages. In other words, similar to any kind of energy drinks, e-cigs are profitable, growing quickly, gaining shelf space and consumer acceptance; therefore e-cigarettes are an important new niche category for retailers.”
Fast facts about the industry
The Bisresearch research survey also revealed current data on the vapor smoking industry, valuing it at an estimated $300 million, which is expected to skyrocket to $2$3- billion in the next few years.
The Bisresearch researchAssociation stated that there are approximately 2.5 million people currently using electronic cigarettes, and that number is estimated to grow to an impressive 40 million users by 2025.
The FDA currently regulates electronic cigarettes as “tobacco products,” but for now the regulation is considered “very light,” and there are no state taxes being actually imposed, vapor smoking is generally cheaper than tobacco cigarettes. Electronic cigarettes are being sold primarily in C-stores and tobacco shops, bringing in almost 80% of the revenue, with online sales accounting for the remainder. Interestingly, vapor smoking is not yet taking shelf space away from the tobacco industry, but that is expected to change with future growth.
When asked if electronic cigarettes were taking shelf space in his shop, one retailer responded, “Not yet, but they should be, and they will be soon.”
Patent issues could inhibit growth
The Chinese-based company Ruyan is credited as the inventor of the modern electronic cigarette and holds international patents for its product in over 50 countries, including the U.S. Previous lawsuits have already been filed by Ruyan against specific electronic cigarette companies for patent infringement, but further infringement pursuits could threaten to slow industry growth.
Many vapor smoking companies remain cautious as they wait to see whether Ruyan will continue hunting for patent infringement or allow the industry to grow.
Future industry regulation, taxation, and consolidation
For now, the level of local and federal regulation is fairly loose, but as the industry grows as projected, government regulation and taxation will become a pivotal turning point in the future of electronic cigarettes. When asked about the future of vapor smoking, one retailer said, “I think this is an arguably legitimate category. The only factor there unknown is what actually the FDA chooses to do long-term.”
In response, electronic cigarette companies are keenly preparing for the inevitable regulation that is to come, knowing that while taxation may be unavoidable, it must be closely watched because too much of it could cripple the young industry. The Bisresearch research also predicted that electronic cigarette companies, online e-liquid retailers to e cigs reviews websites, all will be consolidated as larger corporations discover the potential profit the niche industry could make in the market.
The industry remains severely fragmented for now, but as leaders emerge, smaller companies will most likely be merged with the bigger players.
So What Now?
With Wells Fargo’s conclusion that vapor smoking is not merely a passing fad, and 73% of retailers saying that electronic cigarettes are here to stay, there is a growing interest in vapor smoking. Recently, estimates that the vaping industry will exhibit a potential growth of over 22.36% (CAGR) from 2017 to 2025, to reach a total vape market value of $50 Billion by 2025.
The industry is carefully watching the FDA brace for future regulation and taxation, but hopes remain high, thanks to the “Bisresearch” survey, that vapor smoking will continue to grow substantially in the coming years.
Stay connected with Vape Ninjas as we watch our niche industry take root in the global marketplace. If you would like to learn more about electronic cigarettes than check out this electronic cigarette benefits article.