Smoking Industry Sees Profits Vaporizing With Electronic Cigarettes

smokingSmoking tobacco has decreased nearly 18 percent in recent years for adults and appears to be falling for young people 12 to 17 years old, according to information from the Centers for Disease Control and Prevention (CDC). The downward trend in the tobacco industry may not just be the realization of heath benefits from quitting, but also the result of new, trendy vapor shops, which sell electronic cigarettes, opening around the country and making huge profits.

E-cigarette stores have grown substantially since 2013 because of a number of reasons. More employers, public places and businesses are either restricting or eliminating smoking areas, landowners see the shops as a way to bolster an area where the economy has caused a depression in property rentals and entrepreneurs are seeing the opportunity for healthy profits on the products.

Electronic cigarettes emit vapors containing nicotine instead of tobacco smoke. While e-cigarettes aren’t healthy either because it is a nicotine addition, doctors agree it is safer than traditional cigarettes. According to the figures, there are more than 7,000 chemicals in tobacco cigarettes. That includes components occurring naturally in tobacco plants, chemicals created during the curing and manufacturing process and more chemicals created when cigarettes are lit.

The two concerns health experts have regarding e-cigarettes are the lack of regulatory control over the various mixes that go into the vapes and the enticing flavors, like bubble gum, they fear might be attractive to teens. There is no federal ban on e-cigarettes to teens, although some states have stopped sales of the vapes to young people. Some vape store owners state they will not sell to teens while others offer the younger set a non-nicotine option. The CDC numbers indicate the e-cigarette use is on the rise for young people while traditional cigarette use saw a decrease over the decade between 2000 and 2011. Middle and high school students have doubled their use of e-cigarettes, according to CDC information.

The alternative of e-cigarette use began catching on in 2010. There were more than 3,500 vape stores across the country in 2013 with some cities seeing a dozen stores opening within the year. There are not any concrete numbers on how many vape smoking shops opened in 2014, but Arizona and New York are seeing a lot of growth in the market. Part of the expansion came after a federal court overturned a 2009 U.S. Food and Drug Administration (FDA) ban on e-cigarettes in 2010. The FDA is attempting to implement more regulations but currently only regulates electronic cigarettes that are target-marketed as a therapeutic device.

Property owners are finding the vape stores are a good way to build their profits. There are no special permits or licenses required for vape stores, compared to other retail shops, and landowners can easily transform previous vacant storefronts into a vape shop with relatively little cost. Most local governments also have not seem concerned about the smoking vape shop trend.

Entrepreneurs are not blowing smoke about their profits. Products and accessories are marked up between 200 and 400 percent with some electronic pens costing $250. Two stores in Florida brought in $1.3 million in 2013 alone. The vape trend is leading to a new assortment of products within the industry resulting in more than $1 billion in product and equipment sales in physical vape stores in 2013.

One of the newest trends in the vaping circle is blending that allows customers to mix and match their flavors. Other trends include e-cigarettes that emit a large cloud of vapor smoke or that has other unique qualities so the smoker can use the smoke for special effects.

Even with the downward trend in traditional tobacco use, the United States still has 42.1 million smoking adults. For the vapor industry, that number constitutes a significant opportunity for more sales. Those who want to find a safer alternative to smoking traditional tobacco seem to be happy with their choices in vapor smoking, if growth figures in the industry are any indication of customer satisfaction. A continued growth in the vapor market could mean traditional tobacco profits could go up in smoke, according to industry analysts. Traditional tobacco sales declined 4.5 percent in the first quarter of 2013, the last time the two industries were compared, while sales in the e-cigarette market grew 30 percent.

By Melody Dareing

Sources:

Bloomberg Business

Centers for Disease Control and Prevention (1)

Centers for Disease Control and Prevention (2)

U.S. Food and Drug Administration

Photo by Machechyp – Flickr license

4 Responses to "Smoking Industry Sees Profits Vaporizing With Electronic Cigarettes"

  1. G.j. Cox   March 29, 2015 at 6:13 am

    Not only is tobacco losing money, but federal and state governments are losing big time. The pharmaceutical industry and the non profit medical offshoots (AHA, ACA, ALA, etc.) are big players in the fight against vaping because they stand to lose huge amounts in either their Nicotine Replacement Therapies or treatments for smoking diseases. Ironic isn’t it? Their jobs depend on smokers continuing to smoke!

    Reply
  2. chris   March 28, 2015 at 8:19 pm

    If big tobacco is suddenly losing money, and they’re scared. Good. As a former smoker, current vaper, I now see how evil they are. Please let the FDA get this right.

    Reply
  3. Jay Pieski   March 28, 2015 at 5:46 pm

    Great article, in that it acknowledges what all vapers know, that vaping is fast outcompeting tobacco and the health boon is not from dated anti smoking govt and lobbyist advertisements and taxes, but consumer driven. In reality most adult vapers enjoy fruit flavours just as gum chewers do. It doesn’t mean they’re marketed at teens and children.

    Reply
  4. Lisa Belle   March 28, 2015 at 4:39 pm

    Vapor does not SMOKE, so please correct yourself for the sake of the lives of 45 Million still SMOKING Americans, so they may know that alternative products are available that are VAPOR VAPED not VAPOR-SMOKED. Smoke only relates to combustion. With vaping there is no combustion. There is no connection between SMOKE and VAPOR. Which oddly enough most of those fearful of the success that E-Cigarettes are having, use propaganda slighting meanings, the slippery accidental mis-print and mis-quote of calling vapor, smoke.

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