Vaping is a trending word that is being used more and more frequently. But what is it? A hype that will vanish as fast as it appeared? Or is it the future? Is it a future for a whole industry, future for a whole sector, future for a complete category?

Talking about category… is vaping a substitution? Or is it something new; something that wasn’t there before and something that can be that different, that no one would have anticipated?

NOTE: This article has been written in early 2015 and has been kept private for exclusive access to a small group of blog subscribers. As the topic still is relevant, maybe even more than before, I chose to make it public from now on. Therefore another remark on this topic: There is a lot of discussion on whether “vaping” is good or bad from a health perspective, I am not, at any point in time, suggesting the former nor the latter. I am looking at this category simply from a marketing/branding perspective and only judge and comment about the good & bad for a brand or a brand owning company.

In case you feel uncomfortable about reading about tobacco-related topics, please stop reading any further right here. Thanks.

The up’s and downs of tobacco

As we do call it an “e-cigarette”, let’s have a brief look into the tobacco category first, to see what is going on there. Tobacco is/was/will be?… a growing category, just not everywhere…

The global tobacco product volume (based on numbers from the American Medical Association), showed a rise of plus 26 percent over the last nearly 30 years. Definitely an “up” so far…

But analysing where the growth originates it can be seen that the global average smoking prevalence decreased to less than 20 percent and at the same time the global average daily consumption decreased by more than 1 stick, leaving only global population growth as a driver for growth in tobacco product sales. Not so much an “up” but more a “down” for the tobacco category.

Driving this growth via population growth definitely is being done by the developing markets, where smoking prevalence still decreases, but not so much, while daily consumption even increased slightly and the enormous population growth drove sales of tobacco products big time.

And you might have guessed … this is quite the opposite in developed markets. The slow population growth cannot cover the steep decline in smoking prevalence and decline in average daily consumption.

The rise (and fall?) of tobacco

Definitely these are some up’s and down’s of tobacco sales, but what does it mean for the category itself? Surely there was a rise but does that mean there has to be a fall?

Tobacco / smoking is more than just a product. Many companies, brands, marketers tried to create a lifestyle brand or category instead of “just” a product. Many of them failed. But tobacco surely did it! Smoking from the beginning was all about lifestyle…

… and only looking at the past century shows us that this category had it all: politicians, celebrities, the average guy… Glamour, Power, Sex Appeal… Smoking was not about a product, it was more than that… it was a true lifestyle category.

But what about today? What about smoking and its image in the new century? Public communication as you can find it on the internet is not so much about Glamour, Power and sex appeal anymore. Words like segregation, poverty, obesity and pity are among the top results when looking this up on today’s main communication channel, the internet.

Is it really that bad? Hard to say. But a fact is that sales volume in developed markets is declining. The average smoking prevalence is decreasing, so is the average daily consumption. And fact is also that compared to the past century, communication and image is worse than before.

There’s a new smoke in town

Is everything bad? Well, it certainly is not bright and without problems… but…

… there is hope… because there’s a new smoke in town…

… and we call them “E-Cigarettes”… Remember the image of smoking in the 20th century?…

…this image is back… Forget segregation and loneliness… The cool, glamorous thing is back…

Looking across countries in Western Europe, asking E-Cigarette users how long they have been using them, the results show an increase that is getting steeper each year, meaning the usage numbers are accelerating fast.

Looking at sales numbers, we can see the same development. Coming into market in the US in early 2009, sales did not boost until late 2012 with a peak in 2013. Uncertainty about regulation and health, consolidation in the market, shift of communication focus all lead to a temporary stabilization in 2014.

What will the future bring? Unfortunately I don’t have a crystal bowl… and much will depend on how the industry will further develop this new category.

Looking at what has been done so far; you can see that this new category is highly linked to new sales channels, especially online, while classic sales channels currently follow as the big manufacturers with high distribution power entered this segment.

Comparing “older” vs. “newer” brands (as e.g. done by the University of California, comparing 2012 brands vs. 2014 brands) reveals that this market already is changing and maturing. Newcomers focus on a diverse product portfolio with more flavours and models and a trend away from the “cigalike” towards “eGo” can be seen.

In terms of regional split there are 2 big connected areas, Europe and the US, while 30% are being sold in the rest of the world… but this with a completely different pace and therefore this map will change nearly every day.

The identity crisis

A lot is going on in the E-Cigarette market and that leads us to the first issue that this new category “E-Cigarettes” already has. “Born” like a second ago it already has its first identity crisis…

E-Cigarettes are being discussed, as their name already indicated, in comparison to Cigarettes. Are they better? Are they worse? Should they be regulated? And so on, and so on…

But focusing on the differences than on the similarities, companies and consumers reacted and created a new word for it…

… “vaping”. You smoke a cigarette. But you vape a …well,…so far the name still is “E-Cigarette”, but let’s see how long that will last. Looking at google trends a clear switch from e-cigarettes to vaping can be seen. Consumers did choose: They vape, don’t smoke.

Maybe they will also choose: They don’t use “E-Cigarettes” but “…?!?”

One survey was asking consumers in Western European countries how they would want their E-Cigarette to look like. Yes, some want an exact replica of a cigarette… and a few explicitly don’t want that… but the majority? They just don’t care…

A new lifestyle category emerges       

• Vaping, not smoking
• Devices that have no resemblance with cigarettes
• A global trend that is progressing with an enormous pace
• All good indicators that a new lifestyle category emerges…

Back to the glorious, glamourous, celebrity endorsed and politician-in-public-showcasing habit that is sexy, powerful and just full of fun… Is that possible? Can this happen? Despite possible downsides?

Well, others proved that it works:

Energy Drinks is not just another fizzy-drink, not just a product. It is a lifestyle category. With celebrities, events, connections to all parts of everyday life… Who wouldn’t want to drink this?…

Coffee to go. You see politicians sipping from it during parliament sessions, actors between shopping and chasing off Paparazzis and most important: the van driver, the office worker and the nurse. A lifestyle that hit mainstream.

Sure, not everything should or could be built into a lifestyle segment, -product or –brand. Therefore it will be important to have a really close view on the consumer, … the user, … the vaper…

The Vaper

The Vaper! Who is it?

Based on recent research in the UK, the main Vaper is skilled working class, single, under 24! Based on our this data the social class C2 (skilled worker) really is dominating this category, especially compared to regular tobacco smoker.

In terms of household size, we can see a shift towards smaller households, while smoker households lean towards bigger households

The age of the housewife (as an indicator for the age of the E-Cigarette user) is mainly under 24 and in terms of life stage, E-Cigarette users can mainly be found in pre-family situations, while established family situations and post family situations show high numbers as well.

Looking across 5 countries in Western Europe, the majority of E-Cigarette users use them on a daily base and with the majority smoking 1-10 or 11-20 puffs per session.

The average vaper in the US uses all media to communicate. Noticeable is that the main receiving medium is TV, while the main researching medium is online (especially google) and the main sharing media are facebook and word of mouth. Or in other words: Seen on TV, researched online and shared on facebook…

Trending topics

Taking a good look at the user is the base for successfully creating a new lifestyle category.

Based on my observation at several vaping events during 2014 (e.g. Vaping Fair in Wiesbaden, Intertabac in Dortmund) I could identify the following trends that the manufacturers focus on.

• Flavour! All about flavour! Vaping is not just about tobacco. It is about exotic, fruity flavours. About consuming something flavourful and divers. Choosing the flavour based on your mood.
  
• Sourcing / origin. Made in… Initially confusing communication about ingredients plus a non-regulated communication of ingredients lead to some uncertainty amongst possible users and the industry reacted with highlighting their local production. Made in France, in Italy, in Germany, in … or even more precise: Made in Sicilly…
  
• Health seems to be a big topic, especially when companies try to compare E-Cigarette usage to tobacco usage. This even goes as far as claims like “Developed with doctors” or “Wellness Science”. Clearly a reaction on the controversial discussion of both, tobacco and E-Cigarettes. But this also is changing slowly. With more and more discussions about regulation coming up and with big companies entering the market, overall communication of benefits clearly has been reduced as research from the University of California shows. New brands overall communicate much less than older brands did.
  
• Last trend to point out: Premium. Products in glass cases like in a museum, lots of black and gold or bright white, silver devices and polished tables… If this isn’t about lifestyle… what is? And yes, it is possible to spend a lot of money on it, if you like… as the one example of a Russian Oligarch who spent half a million USSD on a vaping device with diamonds…
  

Veni Vidi Vici Vadam?

Flavour. Sourcing. Health. Premium. Trending topics where manufacturers react to the consumers’ needs and based on public discussions. Doing this right can mean the breakthrough for a brand or not. And looking at some data about brand importance then you can either see “the glass as being half empty or half full”… The negative view would be to realize that the majority of vapers do not care about the brand… The positive view would be that there is a large number of consumers that still can be convinced to be brand conscious… maybe they just lack a brand that matches their values and needs…

Is vaping a hype? Vanishing as fast as it emerged? Or is it a trend with positive development? Again, unfortunately I don’t have a crystal bowl to predict the future. But for sure it can be said that with the right focus on the consumers’ needs and a clear positioning the opportunity to make this more than just a product clearly lies out there.