Balvor Provides New Perspective on E-Cigs

BARRINGTON, Ill. — Electronic cigarette sales were up 14 percent in December compared to the same period in 2013, but this understates the actual growth retailers are seeing, according to the Balvor Retailer Composite (BRC), released Monday.

Barrington-based research firm Balvor LLC believes e-cigarette dollar sales were up more than 25 percent year over year when equalizing chainwide data to an "average per store week." The report is based on item-level sales data from 14 convenience store retailers of varying sizes and from different U.S. regions during a four-week period ended Dec. 28.

“Retailers face challenges when interpreting market-level sales trends relative to electronic nicotine devices (END) today,” said David Bishop, managing partner of Balvor. "The BRC utilizes average per store week, a common retail metric, to analyze the business and develop benchmarks. Doing so helps retailers get a more accurate view of how the business is trending as it minimizes the sample bias toward larger store operators and adjusts for changes in the store base that can distort growth rates.”

The BRC revealed some other key findings:

• Demand for systems continues to follow innovation rather rapidly. Disposables’ sales share has gone from more than 60 percent to less than 30 percent in just 18 months. Rechargeables are now the dominant system type, while refillables have captured nearly 15 percent of the sales after experiencing explosive distribution gains during the last several months.
• Category dynamics are pressuring retail growth rates. Existing products in the market for more than 12 months are reporting essentially zero price inflation; newer, lower-priced brands are growing significant share that is more than 30 percent of total END sales; and refill cartridges and e-liquids are gaining share that is also creating headwinds for top-line sales growth.
• Category analytics and insights need to go well beyond the category level. The role of flavors is showing divergent trends across the END system types, so it’s vital to understand this at the right level. Even though disposables’ share continues to decline, digging deeper into the data reveals there are latent opportunities that retailers may want to consider.

“The END category continues to evolve with innovations that better satisfy what consumers crave,” Bishop noted. “Having the ability to more quickly identify, understand and respond to changes in the marketplace is key for retail growth, which ultimately also benefits manufacturers who are truly committed to providing better product alternatives.”

To learn more about the report or to participate in the BRC, c-store retailers are encouraged to contact Bishop at [email protected].