Here to Stay

One of the nations largest banks, Wells Fargo reports confidence in the retail market for electronic cigarettes. Wells Fargo's annual ”Tobacco Talk” survey published on the 17th of May shows some promising results. They are reporting the devices are more than just a fad.

One of the respondents of the survey is quoted saying”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.” Analyst Bonnie Herzog believes the sentiment is shared by many others as well.

Previous ”Tobacco Talks” surveys have showed very positive attitudes in the past toward electronic cigarettes but Lorillard's decision to join the game just solidified their stance in the market. Experts say electronic cigarettes are a lasting trend and not a passing fad after reviewing this year's survey results. The data shows 73.1% of the respondents share this opinion. E-cigarettes are now being compared to the energy drink phenomenon.

Retailers described a 193% increase in sales from the first to second week of selling electronic cigarettes in their stores. The category has 2.5 million users which is continuing to prove the worth of the devices. According to an industry group, an estimated $300 million in revenue is happening in retail with the potential of increasing to $1 billion in the near future.

Ultimately, Wells Fargo agrees with the survey respondents that electronic cigarettes are more than a passing fad. However, they are cautious and are expecting a downturn in enthusiasm in the future because they are expecting an increase in regulation and taxation. The product boom and impressive growth could be knocked down due to further FDA regulations and an addition of state and federal excise taxes. These are all obstacles the industry will have to overcome.

Besides regulation and taxation, another obstacle e-cigarettes may have to overcome has to do with the amount of space they will take from cigarettes and other tobacco products. Most e-cigarette companies have self-service counter displays but they may soon be required to move elsewhere as the category grows. Some predict the landing spot for e-cigarettes may be among the other tobacco products, making them harder for the consumer to access.

A break down of e-cigarette growth in popular distribution channels

Online
20%

Convince Stores
56%

Tobacco Shops
22%

Other
2%