State-of-the-art developments light up tobacco sales
Selling in the tobacco category is not what it used to be. The Food and Drug Administration has adopted regulations that give it oversight and authority over all tobacco products, including vaping products, which puts manufacturers in a sticky position, particularly because the FDA has even asserted that nicotine-free and synthetic (i.e., nontobacco) nicotine products also could be considered tobacco products. Additionally, tobacco companies must now get preapproval before any new products can be introduced.
These challenges, category observers said, soon could start to hinder companies’ abilities to innovate in the category given the cost and regulatory burden. Yet in spite of them, manufacturers still are launching new products meant to meet the shifting demands of tobacco consumers as some segments in the category already are seeing slower growth due to the new regulations and declining interest in established products.
One area faring well is the alternative segment. Wayne Jones, senior vice president of sales and operations at Fontem Ventures, makers of the blu brand based in Charlotte, N.C., pointed out that pod-style devices continue to represent a rapidly growing segment of the U.S. e-vapor market. According to Jones, blu has been working to maximize its offerings with myblu and ensure the brand can continue to provide options that satisfy adult smokers.
Since its release in February 2018, myblu has been performing above expectations, Jones said, noting that it has captured 7.4% of market share in its first four months on the market. “During the first month of the myblu trial kit promotion, our kit represented roughly one-third of all retailer kit purchases,” Jones said.
In addition to products that use pods, new segments are emerging and generating excitement in the category, including nicotine salt e-liquids.
Created with adult smokers and vapers in mind, Fontem recently launched Salt of the Earth, a line of nicotine salt e-liquids available in five flavors, including The Classic, Just Menthol, Orchard, Lady Camellia and Bee’s Milk. The line is available in 30-ml bottles and in two nicotine strengths.
“Our goal was to offer a range of closed system devices and open system e-liquids to meet a wide variety of consumer usability and flavor preferences,” Jones said.
Likewise, E-Alternative Solutions has introduced Leap, a line of above-ohm products with a nicotine-salt-based e-liquid formula. Value-priced Leap will be offered in both rechargeable and disposable models. Each model offers a wide range of e-liquid flavors and three nicotine levels, including a 0%; so adult consumers can experience a unique, customizable satisfaction.
Leap’s rechargeable device features a sophisticated design, powerful battery and high-capacity e-liquid pods, officials at EAS said. The company also said its products enable users to experience a more authentic gratification that closely resembles traditional tobacco use.
According to Jacopo D’Alessandris, CEO and president of the Darien, Conn.-based company, Leap was created exclusively for adults who seek a satisfying vapor experience, based on the latest science. “Our goal is to deliver powerful, simple-to-use vapor products that can be customized to both a retailer’s business model and its consumer base,” he said. “Leap is only the latest example of our commitment to innovation, category growth and, ultimately, to ensuring our distribution and retail partners achieve outstanding profit margins.”
Promote the category
Given everything going on in the category, officials and manufacturers said tobacco companies and their retail partners simply cannot follow old school marketing techniques and expect to do well today. Rather, they said, the better strategy is to follow a broad tactic that incorporates both traditional and digital media platforms.
“We have had much success utilizing an event platform to create traditional and digital exposure,” said Dave Savoca, president of Smokey Mountain Chew based in Sandy Hook, Conn. “As a company, we are constantly looking at different avenues and ways to reach our target consumer base.”
For Smokey Mountain Chew, lifestyle-oriented promotions have become one of the key opportunities for promoting its brand. Smokey Mountain incorporated the “Major League Bowhunter” logo into its race car’s paint scheme during a race at the Charlotte Motor Speedway. It was announced that Smokey Mountain’s driver, Daniel Hemric, would be moving up to NASCAR’s Cup Series full time next year, which Savoca said garnered even more exposure for Smokey Mountain Chew.
“This was a huge digital event for us, which was also covered by a national TV station,” Savoca said. “We were able to get Chipper Jones, who is currently the cohost of “Major League Bowhunter,”on NBC’s pre-race show in his Smokey Mountain Garb. Chipper also tweeted to more than 1 million followers during the race.”
Demystify the shopping experience
In addition to partnering with companies that actively promote its brand, best practice retailers are optimizing their assortment based on consumer trends and needs, not checkbook category management, experts said. As Jones pointed out, successful retailers are thinking beyond how the tobacco category had traditionally operated and are asking themselves what their e-cigarette consumers need from them.
“The category is still new with many consumers just coming in or returning to these products,” Jones said. “It is important to keep products visible so that adult consumers can investigate and make the best choice for themselves.”
Educating consumers is key, Jones said, adding that it remains the best way for retailers to maximize sales of e-vapor products. Fontem supports this by providing materials that explain the differences and advantages across its entire product range. The company also arms its retail partners with category information on how current e-vapor products deliver penny profit, as well as brand SKU ranking reports to help them optimize sales.
More importantly, experts said it all comes down to minimizing consumer confusion. As D’Alessandris pointed out, consumers often are unsure which product, nicotine level and brand they should use. To mitigate this problem, he suggested giving shoppers a simple, clear purchase funnel. “Don’t confuse them with an overly complicated on-shelf assortment,” he said, noting that the most effective on-shelf assortments correspond to consumer demand.
“A shelf set should not overwhelm with too many brands, but should have the right mix of device, flavor and nicotine choices, corresponding to what consumers seek from the category,” he said.
In addition to choosing the right product mix, partnering with the trustworthy companies behind the brands, experts said, is critical. They advise choosing suppliers that support retailers beyond selling them the product. “At EAS, we bring an entire support system to the retailer, including category management expertise, shelf management, merchandising, compliance and promotional tools,” D’Alessandris said.
EAS takes a solution-based approach and works with retailers to put together the right education materials and in-store advertising to help move sales and ensure products comply with the latest state and federal regulations, D’Alessandris said. “We are focused not only selling in, but also helping retailers sell out.”
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