Published: January 2018 | Report Code: SE10521 |
Available Format: | Pages: 180 |
Category : Electronic System and Devices | |||
E-Cigarette Market Overview
The global e-cigarette market size is estimated to be around $15 billion in 2017, will grow at a CAGR of 27.3% 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. Cig-a-like has the largest e-cigarette market globally, with an estimated size of $6.1 billion in 2017. Between the two categories of cig-a-likes, disposable cig-a-likes are preferred over rechargeable cig-a-likes.
GLOBAL E-CIGARETTE MARKET, BY PRODUCT, $M (2013–2023)
Open tank vaporizers have a larger market than closed system vaporizers, with an estimated 61% market share of vaporizers in 2017. Between the two t-vapor products, the infused type has a higher demand than the heat-not-burn type.
Considering the cigarette industry as a whole, including nicotine-based and nicotine de-addiction products, the e-cigarette market comprises a small fraction of the total addressable market. This shows existence of a vast untapped market. Their users can be both: the ones who consider it as a measure to quit smoking and the ones who are new to smoking.
Geographically, North America has been the largest e-cigarette market, with an estimated size of $5.2 billion in 2017. However, Asia-Pacific is projected to lead the industry growth during the forecast period. The U.S., the U.K., and China have been the key e-cigarette markets globally, estimated to account for a combined global share of around 53% in 2017. Russia, Germany, Italy, and Japan are the other major markets witnessing fast growth.
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, and 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.
Tobacco and next-generation cigarette manufacturers are coming together to add more value to their products. To sustain and prosper in the competitive e-cigarette market, large tobacco companies are acquiring the related technology providers for the in-house production and manufacturing of the next-generation cigarettes, under their own brands.
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, a subsidiary of Altria Group, bought Green Smoke Inc., for $110 million, to enhance the quality of its products by making use of 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.
Growth 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.
The e-cigarette market is driven by a continuous rise in the development and innovation of vapor technology, as an alternative to traditional cigarettes, to reduce health problems caused by tobacco smoking.Increasing number of vape shops and designated stores is another driver for the growth of the e-cigarette market. The manufacturers are focusing on investments in major retail outlets and grocery stores to promote and sell their products exclusively through kiosks and designated in-store hubs. Many providers have set up their own brand outlets and stores to provide vaping experience similar to that provided by clubs. Such outlets and designated stores are creating demand for various vaping products, thereby acting as a driving force for the growth of the e-cigarette market.
Companies such as VaporFi have set up exclusive vape stores across different geographies such as the Americas, Europe, and Asia-Pacific to sell their products directly to the customers. Smokers are more attracted toward these stores, as they come across a variety of flavors and new devices. The rising number of such stores is also increasing the reach of these players in the market, enabling them to introduce their products to the wider target group. This, in turn, is driving the e-cigarette market growth globally.
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.
Key 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 behavior. Companies manufacturing chips, sensors, and other digital components 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. They are also being adopted by consumers as an alternative to tobacco cigarettes, as they reduce the cost incurred in smoking tobacco. With focus on replacing traditional tobacco cigarettes with safe vaping technology, the e-cigarette market is expected to witness significant growth in the near future.
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. British American Tobacco is the market leader, followed by Imperial Brands and NJOY. All the players in this industry do not offer all types of e-cigarettes; for instance, Philip Morris International offers t-vapor products but not cig-a-likes. Similarly, Imperial Brands offers cig-a-likes and vaporizers but not t-vapors. 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.
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