E-Cigarette Market by Product (Cig-a-like [Disposable, Rechargeable], Vaporizer [Open Tank, Closed System], Vape Mod), by Distribution Channel (Vape Shops, Supermarkets, Online, Tobacconists), Aftermarket Products (Refill, Battery & Charger), by Geography (U.S., Canada, U.K., France, Russia, Germany, Italy, China, Japan, South Korea, South Africa) – Global Size, Share, Development, Growth, and Demand Forecast, 2013–2023

E-Cigarette Market Overview

The global e-cigarette market was valued at $13,899.9 million in 2017 and is forecasted to witness a CAGR of 19.6%, during 2018–2023. Growing awareness on health in consumers and increasing number of vape shops and designated stores have been the key drivers for the e-cigarette market growth, globally.

In terms of product, the e-cigarette market has been classified into cig-a-like (including disposable, rechargeable), vaporizer (including open tank and closed system), and vape mods. Cig-a-like category accounted for the highest share in 2017, owing to its low price which led to its increased adoption among e-cigarette consumers. While the market for vape mod is projected to grow at the fastest pace, during the forecast period. Development in vaping technology and wide range of flavor availability are set to be critical growth drivers for vape mods, during the forecast period.

APAC E-CIGARETTE MARKET, BY PRODUCT, $M (2013-2023)

Based on distribution channel, the e-cigarette market has been categorized into vape shops, online, supermarkets, and tobacconists. Vape shops have been the most important sales channel for e-cigarettes, through which the market generated around 46% of the global revenue in 2017. With the emergence of e-commerce, which offers various discounts and promotions to lure customers, the sale of e-cigarettes through online channel is projected to grow fastest, during the forecast period.

E-Cigarette Market Dynamics

Trends

With the growing popularity of vaping devices, flavor and fragrance vendors are introducing a large variety of flavors to attract the manufacturers. Different flavors such as menthol, mint, chocolate, cola, bubble gum, and fusions of other fruits and flavoring substances are luring a large number of consumers to adopt them. The trend is expected to continue and contribute to the growth of the e-cigarette market in the future.

Emerging companies in the industry are also gaining advantage through various mergers with tobacco cigarette giants. With such acquisitions, these enterprises aim at combining their offerings, such as supply of raw components, sensor chips, and batteries, and logistics services, to increase efficiency. Companies in the e-cigarette industry are mainly buying assets and common shares to gain access to each other’s products and services. For example, Philip Morris Inc., a subsidiary of Altria Group, bought Green Smoke Inc., for $110 million, to enhance the go to market strategy of its products by using Green Smoke’s supply chain and customer services. Mergers and acquisitions in the industry are expected to continue with the growth of the e-cigarette market.

Drivers

Globally, awareness on health hazards due to smoking is increasing. This has resulted in the development of alternatives that have helped consumers quit traditional cigarettes. Cancer caused by smoking is one of the major concerns affecting people, globally. E-cigarettes eliminate the risk of cancer and prevent the intake of more than 4,000 chemicals, which are produced during the burning of tobacco cigarettes.

Continuous development in the technology is also driving the e-cigarette market. Tobacco manufacturers are increasingly focusing on new technological developments to have an edge over their competitors. This has persuaded the vendors to invest more in technology to sustain in the competitive space.

Major tobacco companies are entering into agreements with technology providers in the market. With such agreements, companies are aiming at evolving their products with changes in technology and consumer behaviour. Companies manufacturing chips, sensors, and other digital components, which are also incorporating latest techniques to reduce the cost of technology and therefore the overall cost of manufacturing. This, in turn, is helping the market players to provide low-cost alternatives to traditional tobacco cigarettes.

Opportunities

Consumers’ shift toward tobacco alternatives, untapped market in emerging economies, and increasing investments in the industry are some of the key factors offering immense growth opportunities to the players operating in the e-cigarette market.

With rapid increase in the number of people addicted to tobacco smoking globally, the next-generation cigarettes are gaining value as an alternative to traditional tobacco cigarette. Tobacco companies are shifting their focus from traditional tobacco products to next-generation vaping devices because of more people, particularly teens, suffering from serious health problems caused by tobacco intake.

The e-cigarette market has a potential to expand in regions that are still uncertain regarding the adoption of this technology, such as Asia-Pacific, Latin America, and Africa. Tobacco companies and manufacturers of next-generation cigarettes in these regions are expanding their business to achieve greater reach for their products through various channels, including e-commerce, retail partners, and grocery stores. Besides, companies are also focusing on acquiring local and national distributors having a dedicated market to distribute their products.

E-Cigarette Market Competitive Landscape

The e-cigarette market is fragmented, and the top three players are estimated to account for over 60% of the total market share in 2017. Imperial Brands plc is the market leader, followed by British American Tobacco plc and NJOY Inc. All the players in this industry do not offer all types of e-cigarettes; for instance, Philip Morris International offers vaporizer products but not cig-a-likes. However, with the existing product differentiation, a state of uncertainty prevails among the players in the market, as a shift in consumer taste can alter their share in the market.

Some of the key players operating in the e-cigarette market are British American Tobacco plc, Altria Group Inc., Japan Tobacco Inc., Imperial Brands plc, Philip Morris International Inc., VMR Products LLC, NJOY Inc., International Vapor Group, Vapor Hub International Inc., and FIN Branding Group LLC.