that electronic cigarette enthusiasm is high. So it makes sense that
Wells Fargo senior analyst Bonnie Herzog decided to center her most
recent “Tobacco Talk” series around the nascent category, inviting Kevin
Frija of Vapor Corp. to share his insights on the segment.
“The
retailers are definitely open to [the category],” Hallandale, Fla.-based
Vapor’s CEO told conference attendees on Tuesday. “There’s a consumer
demand that’s undeniable. They also see that the profit margins are a
little better than cigarettes. It’s a new product that is driving
consumers to the stores.”
Still, with a new e-cigarette company
seemingly entering the scene every day, choosing the right product can
become an overwhelming task; however, despite there may not be as many
viable e-cig options as it seems.
“At first glance, it may seem like
the barrier to enter is not that tall and that may be correct for
someone to develop a brand online or sell a brand locally,” Frija said.
“However, as we all know, there’s limited space in the stores. Anyone
can produce an electronic cigarette bring it to market, but will the
retailers actually accept it and will they placement in the stores?
That’s the real barrier for entry at retail.”
As most tobacco retailers
are aware of, the issue is space. As it stands today, Frija believes
there’s only room for about five e-cigarette companies to truly succeed
at the retail level. If e-cigs were to surpass traditional tobacco
cigarettes in terms of consumption, the number may grow to ten—still far
less than the hundreds of companies currently attempting to market the
product.
”Most retailers have started out with a small footprint for
electronic cigarettes,” said Frija, stating that most retailers start
out with one or two options. Currently, the law allows for electronic
cigarettes to be sold on the counter, but many believe that regulations
will ultimately force e-cigs to off the counter, meaning retailers will
have to make room in an already crowded back bar. According to Frija,
some retailers are already doing do.
With e-cigs only recently entering
the scene, the category has already come a long way from the days of
bulky $100 kits sold exclusively online. The one certainty is that the
segment will continue to evolve, especially at the retail level. (CSP
Daily News: www.cspnet.com)
