Consumers have a hierarchy of needs and desires, ranging from a need to fit in and be liked, to following the latest trends. Consumers are especially anxious to follow health trends, according to a recent Ipsos report, and this represents a tremendous growth industry. The vaping and e-cigarette market in particular has seen overwhelming growth as consumers look for tobacco alternatives.
The Ipsos report asked consumers concerned about wellness which items they have tried or plan to try. At the top of the scale is root vegetables, but along with eating carrots and beets, 28 percent of total adults and 45 percent of Millennials reported that they have in the past, or plan to, try e-cigarettes.
E-cigarettes and vaping represent one of the fastest growing global sectors, especially noteworthy because of the newness of the industry and its rapid rise from a niche product to mainstream.
According to a recent Orbis Research report, “The market is expected to gain traction over the forecast period [2018-2025], owing to growing popularity of these products among millennials. Moreover, availability of a variety of e-cigarette options is another factor projected to provide a tremendous push to the market over the forecast period.” BIS Research has also weighed in with a prediction that the market, which was estimated at $11.43 billion in 2016, will grow to $86.43 billion by 2025, with a phenomenal CAGR of 23.25 percent between 2017 and 2025. According to the BIS Research report, factors contributing to this growth include rising health awareness among consumers, and the search for alternatives to traditional tobacco cigarettes.
Two factors may negatively impact projected growth, and these are new legislation such as San Francisco’s controversial Proposition E, and new tariffs. “E-liquids are mostly manufactured in the USA and would not be impacted, but the hardware and raw materials are supplied mostly by China,” said Todd Skezas, CEO and co-founder of San Diego-based Vapor Authority. Imports of Chinese-made vaping devices total about $300 million a year, and new tariffs would have a serious impact on domestic resellers.
“The industry is dominated by smaller businesses, which may not be able to withstand the tariff challenge, which could drive up prices by as much as 15 percent.” Skezas notes that recent studies show that a 10 percent price increase in e-cigarettes would reduce sales by 12 to 19 percent. “This is a rapidly growing, but low-margin business,” said Skezas. “Tariffs could be devastating, especially to smaller shops and US-based providers.”
Despite the potential negatives, the market remains poised for growth, driven by the growing demand for tobacco alternatives and awareness of health risks. “The e-cigarette and t-vaporizer market is going to be driven by the urgent need to reduce global tobacco related mortality and morbidity,” said Abdul Wahid, Lead Analyst at BIS Research. The report notes that North America is the largest market for e-cigarettes, while Asia Pacific is the largest market for vapor products.