Tobacco Talk, a recent survey conducted for Wells Fargo Securities showed retailer confidence in e-cigarettes has been growing steadily, with a big boost from Blu Cigs’ acquisition by Lorillard.
The survey conducted on May 17 this year revealed that 73.1% of respondents believe e-cigarettes are not just a passing fad, but a long-lasting trend, similar to the energy drinks niche. Just a few days ago we reported more and more convenience stores were clearing tobacco space for electronic cigarettes, as a way to maximize profits, and these latest results clearly show the majority of stores are taking electronic cigarettes seriously.
“I believe that e-cigarettes are a viable category and will continue to grow with the major brands rising to the top … with Lorillard purchasing blu, some validity has been added to the category.” This was the opinion of one tobacco retailer, but the majority agreed that the deal between Blu Cigs and Lorillard boosted confidence in the relatively new e-cigarette industry. Now, other Big Tobacco companies are expected to make similar moves, and businesses are ready to capitalize on the growing trend. Before the acquisition, few convenience stores had the courage to invest in promoting e-cigarettes, but the historic deal convinced them e-cigs are here to stay.
Another reason for the enthusiasm around electronic cigarettes is news of a particular retailer who saw an impressive 193% increase in sales from the first to the second week of offering NJoy e-cigarettes in its stores. Of course, not all businesses promoting e-cigarettes experienced this kind of profit growth, but the over 2.5 million e-cig users reported by industry group Tobacco Vapor Electronic Cigarette Association, and the an estimated $300 million in revenue currently at retail are proof of the niche’s worth and potential.
But not all the respondents in the Tobacco Talk survey were this optimistic about e-cigarettes. Some expressed concerns about the industry’s ability to maintain this accelerated growth citing the possibility of more regulations by the Food and Drug Administration (FDA), and further state and federal taxes. Although Wells Fargo analysts also agreed e-cigarettes are definitely here to stay, they also predicted increased taxation and FDA regulations, if only to curb the general enthusiasm.