Barrington, Ill. – According to the latest Balvor Retailer Composite (BRC) numbers, the e-cigarette category was up almost 14% in December for total, chain-wide sales across participating retailers, compared to a year prior. However, according to Balvor, this number likely understates the growth that many retailers are experiencing, as their “average per store week” (APSW) data reports that dollar sales are up more than 25% year-over-year. 

“Retailers face challenges when interpreting market-level sales trends relative to Electronic Nicotine Devices (END) today,” said David Bishop, managing partner of Balvor. The BRC utilizes APSW, a common retail metric, to analyze the business and develop benchmarks. “Doing so helps retailers get a more accurate view of how the business is trending as it minimizes the sample bias toward larger store operators and adjusts for changes in the store base that can distort growth rates,” he said.

Balvor added nearly a dozen custom segmentations to every SKU sold by the retailers surveyed in order to analyze the category more effectively. Key findings include:

• Demand for systems continues to follow innovation rather rapidly. Disposables’ sales share has gone from above 60% to under 30% in just 18 months. Rechargeables are now the dominant system type while refillables have captured nearly 15% of the sales after experiencing dramatic distribution gains during the last several months.
• Category dynamics are pressuring retail growth rates. Existing products in the market for more than 12 months are reporting essentially zero price inflation, while newer, lower-priced brands are growing significant share that is over 30% of total END sales, and refill cartridges and e-liquids are gaining share that is also creating headwinds for top-line sales growth.
• Category analytics and insights need to go well beyond the category level. The role of flavors is showing divergent trends across the END system types so it’s vital to understand this at the right level.  Even though disposables’ share continues to decline, digging deeper into the data reveals there are latent opportunities that retailer may want to consider.

“The END category continues to evolve with innovations that better satisfy what consumers crave,” Bishop said. “Having the ability to more quickly identify, understand and respond to changes in the marketplace is key for retail growth, which ultimately also benefits manufacturers who are truly committed to providing better product alternatives.”

The report is based on item-level sales data from 14 convenience retailers, representing retailers of different sizes and from various regions across the United States.  While the report focuses on the four weeks ending December 28, 2014, it provides comparable benchmarks from July 2014 with prior data for both periods and includes manufacturer performance overall and by system type.