Tobacco: Blazing Developments

How growth spurts and product evolution will affect tobacco sets

The innovation engine driving the tobacco category is propelling multiple segments, from vapor varieties to moist smokeless. With the bar raised higher, it’s safe to assume that there will be much more innovation throughout the remainder of 2015 and into next year.

Adding to the churn of innovation is the potential effect of Winston-Salem, N.C.-based Reynolds American Inc.’s acquisition of Lorillard Inc., Greensboro, N.C., and its influence on category sets and the product pipeline. And let’s not forget that Imperial Tobacco Group plc, Bristol, U.K., plans to curate several inherited brands in the aftermath of the deal, including Winston, Kool and Salem from Reynolds, and Maverick and blu eCigs from Lorillard.

Categorywide, there’s a trove of new rollouts in vaporizers and e-cigarettes, cigarillos, cigars, moist smokeless and cigarettes. Innovation across the vaping segment is evident in style, sophistication, sleekness, fancy colors, new flavors, smaller packaging and—if none of the above meet your customers’ needs—customization.

What follows is a roundup of the latest in tobacco innovation, sales indicators for the remainder of the year, and the legislation that could leave its mark on that new-product pipeline.


In the vaping/e-cig segment, there is a significant shift toward rechargeable/refillable devices over disposables, according to The Balvor Retailer Composite, a study that breaks down chainwide data to an “average per store week.” Rechargeable and refillable offerings have upped their share significantly, says David Bishop, managing partner for consulting group Balvor LLC, Barrington, Ill.

Reinforcing Balvor’s e-cig/vaping growth trajectory data, Euromonitor International data indicates that e-cig and e-liquid product sales nearly doubled in size from 2013 to reach $6 billion globally in 2014.

“Since its introduction to the market in 2005, vapor products have grown by nearly 70%, eclipsing nicotine-replacement-therapy products, which in comparison stood at $2.4 billion in global sales in 2014,” says Zora Milenkovic, head of tobacco research for Euromonitor International, London.

A change in consumer preferences and a desire for healthier lifestyles are driving this shift, with mature markets leading the way, according to Euromonitor. The United States dominates the vapor-products market, with nearly half of global sales ($2.8 billion) in 2014.

Also, a recent online Reuters/Ipsos poll of American consumers suggests e-cig usage is significantly higher than the government estimates. The survey, conducted from May 19 to June 4, 2015, shows nearly 10% of adults (and 15% of adults under 40) now vape—nearly four times the 2.6% figure the U.S. government estimated in 2013.

The difference might come from a spike in vaping from the government’s 2013 estimate: The Reuters poll showed almost 70% of vapers started within the past year. Health and smoking cessation seemed to be at the center of why survey respondents supported vaping; almost half of the vapers surveyed said they were motivated to switch by friends and family.