An Overview of the E-Cigarette Market

by

By Lee O’Donovan

The vapor market is continuing to grow exponentially with both Europe and America leading the charge. In 2015 this segment accounted for around 45% (US$3.5 billion) of all retail sales this market in the US and approximately 42% (US$3.3bn) in Europe. Euromonitor predicts that these two geographies are set to continue to drive category revenue, forecasting that sales will increase to US$8.9bn in the US and to US$6.8bn in Europe by 2020.

While the US and Europe are leading the way, other regions are showing strong growth in the vapor segment. Asian countries particularly are becoming important players, with China, Malaysia, and South Korea featuring in the top 20 markets globally for retail sales value since 2015.

However, given the leading role that the US and Europe are playing in the vapor market, it is no surprise that industry regulation has largely centred round these jurisdictions, with the introduction of FDA (US) and EUTPDII (Europe) legislation.

Innovation against a backdrop of regulation

The introduction of the US FDA in August 2016 forced the vapor industry to fast-track product development, innovation, and marketing initiatives, resulting in a proliferation of new products reaching the market ahead of the deadline. Through its partners in the US, the filter company Essentra launched a range of e-cigarette products in advance of the regulatory change in various sizes (slims and standard size), product types (disposables and rechargeables), nicotine strengths (0 – 24mg), and flavors. This portfolio of initial products has since provided a platform for Essentra to launch new offerings.

The adoption of the EUTPDII in May 2016 caused a similar situation in Europe. Among the changes brought about was the requirement that liquid containing nicotine could not be sold in concentrations over 20mg/ml. Essentra’s Scientific Services laboratory was one of the first in the world to be accredited for testing tobacco products and e-cigarette components. Therefore the company’s laboratory offers a range of commercial testing capabilities to allow vapor companies to respond to this regulatory change.

So what about Asia?

While the vapor segment is still in its infancy with relatively low levels of market penetration and some adverse regulations already in place, the Asian market represents a significant and untapped opportunity. If the industry is allowed to become established and flourish, with a quality-focused regulatory regime that allows it to benefit from new product development and innovation while also ensuring high quality and safe product standards, Essentra is well positioned to supply its range of tobacco products and services in across Asia.

Essentra’s vapor category products and services:

As a leading global supplier of filter technologies, tobacco packaging and scientific services testing, Essentra has an established and respected reputation within the tobacco industry. In addition to its existing solutions, Essentra has drawn on alternative technologies and experience from its various business units to offer customers a turnkey solution in the e-cigarette market.

Essentra’s reservoir chamber can be fitted into rechargeable and disposable ‘cig-a-like’ devices. By constructing these reservoirs from engineered fibers without using chemical additives, Essentra has found that devices with the implemented technology can deliver higher volumes of vapor whilst also providing greater device consistency. This popular form of device is already being sold in American and European markets.

Essentra is also able to provide a complete and bespoke e-cigarette customer solution. The company’s specialist manufacturing facility in the US consists of a fully-automated filling, capping and labelling machine which is capable of producing up to 900 units per hour. The facility also features a conversion machine handling both cartomizers and disposables. It can dispense liquids between 0.3-1.3ml in all, known, e-liquid viscosities, as well as carrying out quality control measures during production. Automated and semi-automated packaging and labelling capabilities within the facility also enable the company to offer its expertise in packaging, printing and labelling, providing a complete solution.

With its innovative products, packaging and testing, Essentra is well equipped to help its customers provide products that both comply with legislation and recognize consumer trends and tastes – regardless of the differing regulations around the world. While changes resulting from the EUTPDII and FDA legislation pose challenges for tobacco companies, it is clear that they also present opportunities to innovate too. As the awareness of health concerns grows, the requirement for innovation and testing is likely to continue to increase too – it will be interesting to see how the US, European, and Asian markets develop.