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Electronic Cigarettes Gaining Ground

An exclusive US industry survey – the UBS-CSP Daily News poll - shows that more than three-quarters of retailers believe e-cigarettes will continue to grow as a category.

"With cigarette smoke becoming socially and lawfully unacceptable in public facilities, e-cigs offer an alternative" one US retailer said. "Our society in general may not be so offended by nicotine as much as the smoke tobacco cigarettes create. Consumers like energy drinks and what they contain...so why not nicotine? I do think the category will grow considerably."
E-cigarettes have generated enormous attention over the past two years as an alternative to cigarettes. The sector is showing some real wins:

  • E-cigarettes are penetrating most of the channel, albeit with mixed results.
  • More merchants are featuring multiple brands instead of just one.
  • Some e-cigarette brands are emerging as frontrunners.

Of survey respondents, more than 80% said they were carrying e-cigarettes, with the majority of those marketing a minimum of two or three brands.

"Retailers are still in sampling mode," said UBS tobacco analyst Nik Modi. "What will define the winners is capital, because it's going to take a lot of capital to get brand equity, have a product that can withstand FDA scrutiny."

80% of e-cig retailers experience growth

The UBS-CSP Daily News survey further asked if sales of e-cigarettes had grown over the past 12 months. The answer was an emphatic yes. 80% of retailers had experienced growth, and only 3% reported a decline, with the rest remaining flat.

"I've merchandised them for the last nine months and have [had] great success in sales," a retailer said.

Not surprisingly, more than three-quarters of respondents said they expect the category to continue to grow.

"More people are trying them," a retailer said. "We are getting refill orders and the disposables are picking up a little bit."