scorecard
  1. Home
  2. stock market
  3. The E-Cigarette Boom Is Over

The E-Cigarette Boom Is Over

Rob Wile   

The E-Cigarette Boom Is Over

stephen dorff electronic cigarette

BluCigs

blu eCig spokesman Stephen Dorff.

Remember e-cigarettes?

They were among Citi's Disruptive Innovations of 2013, a list which came out a year ago.

Since then, we've seen a flood of state and local regulations restricting their use by minors and banning them from certain venues. And the restrictions have likely only just begun.

Last week, Citi updated its view of the e-cig market to reflect this and other changes. Their conclusion: E-cigarettes have now reached, at best, a temporary plateau in expanding. The most immediate issue is that they've worked their way through all possible early adopters.

Over the last six months, we have seen both dollar and volume sales growth decelerate in the e-cigarette category (Nielsen-tracked, brick and mortar). Indeed, the deceleration is coming from both negative mix shifts [e.g. margins - ed.] as well as softening volumes. The negative mix-shift seen for the category is inevitable as technology improves, formats change, competition intensifies, and prices come down.

Here's the chart showing the deceleration in growth:

ecigarette sales

Citi


They continue - emphasis ours:

...We believe the decelerating volume growth that we are seeing reflects: 1) changing retailer brand preferences (e.g., brand destocking / replacements); as well as 2) consumer dissatisfaction with the product. Indeed, we suspect that the ~26% adoption rate for e-cigarettes, relative to a trial rate of 40%-50% (including non-purchase), probably falls well below that seen for many consumer electronics.

They are not wholly bearish, maintaining that consumers are still interested in e-cigs, but that producers will have to pull forward spending to boost numbers. But they warn that all new possible state and federal regulations and taxes must be turfed out first.

READ MORE ARTICLES ON



Popular Right Now



Advertisement