USA

Disposable E-Cigarette Sales Take Off in USA

CHICAGO — Customers gave little to no attention to the disposable e-cigarette category before a year ago, said Nik DiMambro, category manager for Nouria Energy Corp.

That’s when the U.S. Food and Drug Administration’s (FDA) guidance banning flavored vapor cartridges took effect. And while flavored disposables have been popular for years for some category managers in convenience stores, many attribute the subcategory’s recent spike to the FDA’s new rule enacted in February 2020.

“We have seen tremendous growth year over year,” DiMambro told CSP in late December. “We’re seeing upwards of 82% growth in disposables.”

Nouria Energy only carried blu disposables, from Greensboro, N.C.-based ITG Brands, until the FDA changed its rules. That prompted the Worcester, Mass.-based chain of about 120 stores to add Jacksonville, Fla.-based E-Alternative Solutions’ (EAS) Leap Go disposable e-cigarette.

Nouria Energy’s spike in disposable sales following the FDA’s move mirrors the national trend.

Disposable e-cigarettes took in more than $453.5 million in dollar sales and 44.4 million in unit sales in c-stores for the last 52-week period ending on Nov. 21, according to Nielsen, Chicago.

This marked tremendous growth from the three years prior.

Unit sales grew 211.8% during the 52 weeks ending on Nov. 21, Nielsen said. That’s compared to 12.3% growth in 2019 and 4.7% growth in 2018.

With the huge demand in the subcategory, c-store retailers must determine which products they’re comfortable carrying, if any, and continue to navigate ongoing regulation.

Disposable E-Cigarette Sales Take Off

‘A loophole’

In January 2020, the FDA announced flavored cartridge-based e-cigarettes—excluding tobacco and menthol—must be pulled from shelves by the next month. Those products can come back on the market only if the FDA authorizes them through the premarket tobacco application (PMTA) process.

The FDA’s guidance resulted in a slew of new disposable e-cigarette companies hitting the market and taking advantage of what some call a loophole to fill the gap in flavored vaping products.

“Those products for the most part didn’t exist at retail in any consistent manner a year ago,” said Kraig Knudsen, tobacco category manager at Circle K’s Heartland Division, Lisle, Ill. “It wasn’t until the FDA came out and said, ‘We’re going to ban flavors on refillable systems, but we’re not going to enforce the action against disposables.’ All those companies said, ‘Here’s a loophole. I’m going to just create a disposable, have any kind of flavor I want and sell a boatload of them.’ It’s worked for them.”

The FDA noticed. Beginning in July, it started cracking down on e-cigarette companies, such as Puff Bar, that sell fruity, disposable products that the agency said appeal to youths. Puff Bar has since ceased all sales in the U.S., according to its website.

At the time, the FDA also issued warning letters to 10 other companies that the FDA said appealed to youth and didn’t have the required premarket authorization.

Results from the 2020 National Youth Tobacco Survey, released in September, said that while fewer U.S. youth are using e-cigarettes compared to 2019, there was an “alarming uptick” in the use of disposable e-cigarettes by youth.

Another safeguard to keep flavored disposables out of the hands of youth is through the Preventing Online Sales of E-Cigarettes to Children Act, which Congress passed in December and took effect in early 2021. The bill requires that online e-cigarette retailers to verify the age of customers for all purchases, require an adult with ID to be present for delivery, label shipping packages to show they contain tobacco products and comply with all state and local tobacco tax requirements.

“We feel brick-and-mortar is the best place for restricted items, not online,” said Mark Hopkins, owner and president of Little Rock, Ark.-based Max Distributing, which has submitted a PMTA for its MNGO disposable vape sticks made in 10 flavors and varying nicotine levels. “We think [the new law] will only help the safety of the product and keep it out of the wrong people’s hands.”

Disposable E-Cigarette Sales Take Off

‘Adults want flavors’

Chris Howard, vice president, general counsel and chief compliance officer at EAS, said he thinks the FDA will continue to act against bad players and provide a pathway to enable flavored products back on the market, but it will take time.

“If that drags on much longer, it’s a problematic situation because of course there’s confusion at retail and, more significantly, the companies that are following the rules are really suffering as a result,” Howard said. “Adults want flavors. We know this, and what are they doing? They’re buying [noncompliant] flavored disposables instead of buying the compliant products, like ours and our competitors.”

Knudsen of Circle K agrees that there are some very good products in the disposable e-cigarette space, but lesser quality products are putting a black eye on the legitimate vapor companies and their products. He also worries about those products that the FDA does not approve. Such an action would put a less-established disposable company out of business, and the retailer would be stuck with the cost of its products.

Knudsen carries NJOY Daily from Scottsdale, Ariz.-based NJOY and blu disposables in the Heartland Division’s stores. He would like to expand his disposable set—if the FDA authorizes a product.

DiMambro of Nouria Energy doesn’t believe the FDA will crack down on disposables until the PMTA process is completed. However, at least twice in January the agency has seized thousands of counterfeit e-cigarettes at airports, including more than 33,000 units resembling the Puff Bar brand at the Dallas Fort Worth International Airport.

“Right now, the concern for the category is the PMTA process,” DiMambro said. “If the FDA starts approving non-disposable items that have flavors, the whole disposable scene could change. We are also concerned that certain brands that have applied will not get approved. When that happens, retailers could be stuck with inventory that they cannot sell.”

As such, manufacturers that have filed PMTAs with the FDA want to assure retailers they can be confident in selling their products.

“I foresee demand for disposable and cartridge-based vape products growing tremendously,” said Andrew Laron, vice president of sales with Ziip Lab, San Francisco-based maker of ZSticks. “More and more individuals will replace traditional cigarettes with vape products.”

John Taylor, chief marketing officer with manufacturer Dinner Lady, said part of what’s driving the trend in disposables is that the devices require no expert education for either retailers are consumers.

Dinner Lady, based in Blackburn, U.K., sells the Vape Pen Max and a Tobacco Free Nicotine Vape Pen in the United States, which come in a variety of nicotine strengths and flavors.

Source
CS Daily News

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