E-Cigarette Market Overview
The e-cigarette market was valued at $11.5 billion in 2018 and is anticipated to register a CAGR of 21.6% during 2019-2024. Rising awareness pertaining to harmful effects of smoking is one of the major drivers observed in the market. Moreover, changing consumer preferences, increasing number of vape shops and designated stores, as well as new product innovations are propelling the growth of the e-cigarette market.
Based on product, the e-cigarette market is categorized into cig-a-like, vaporizer, T-Vapor and vape mod; of which, vaporizer category accounted for the highest share in 2018, owing to its moderate cost, dense aerosol production, and flexibility where it can be used with different type of flavors. Development in vaping technology and increased flavor offerings are further expected to attract more users to the existing customer base. Furthermore, e-cigarette manufacturers have been promoting their offerings as an economical alternative to the traditional tobacco cigarettes, which might attract more users.
On the basis of distribution channel, e-cigarette market has been categorized into tobacconist, hypermarket/supermarket, vape shops, online, and others. Among these, tobacconist category has led the distribution channel, closely followed by vape shops. However, market for online channels is expected to witness the highest CAGR during the forecast period, owing to the increasing adoption of e-commerce; where manufacturers are either selling their product through online partner channels like Amazon, Alibaba, Craigslist or through their own online portals.
On the basis of region, Europe has been observed as the largest e-cigarette market, globally. Majority of the revenues can be attributed to the U.K., France, and Russian markets. The level of e-cigarette usage is increasing across the region, where according to European Union (EU), one in seven traditional cigarette smokers classify themselves as current e-cigarette smokers.
E-Cigarette Market Dynamics
Growing awareness toward harmful effects of smoking traditional cigarettes is increasing across the world. This has resulted in the development of alternatives that help consumers to quit traditional cigarettes. Cancer caused due to smoking is one of the major concerns affecting the populace. E-cigarettes mitigate the risk of cancer and prevent the intake of more than 4,000 chemicals that are present in tobacco smoke. Due to various benefits offered by e-cigarettes over traditional cigarettes, there is increasing demand of e-cigarettes around the world. For instance, e-cigarettes do not contain tobacco and many other toxins and carcinogens that lead to cancer and lung diseases. Additionally, e-cigarettes emit less toxic material and are less risky to smokers having asthma problems.
Tobacco manufacturers are increasingly focusing on new technology developments to have an edge over their competitors. This has persuaded e-cigarette vendors to invest more in R&D activities to develop and innovate new flavors, compact vape designs, efficient battery packs, among others, to remain competitive in the e-cigarette market. Major tobacco companies are entering into agreements with the technology providers, innovators, and flavor specialists in the e-cigarette market. With such agreements, companies aim to evolve their products with changes in technology and consumer behavior.
In order to increase the presence of their products globally, vendors are expanding their sales channels to identify prospective customers for their products, in the e-cigarette market. The e-cigarette companies are increasingly marketing through online channels and are promoting their products through social media. Moreover, the e-cigarette vendors are increasingly using online channels to attract a greater number of customers by offering promotions and discounts on new purchases.
In April 2019, Philip Morris International Inc. announced that it would offer insurance premiums to tobacco users who are switching toward vaping products. Under this plan, the company announced that customers who would be switching to any type of e-cigarette product of the company would be given 2.5% discount in premium plans. Further, with rising digital marketing trend in many countries such as China, India, and the U.S., there is increasing focus of e-cigarette manufacturers to increase the promotion of their products through online channels.
Several incidents have been reported where consumers have sustained major injuries whilst using e-cigarettes, due to malfunctioning of atomizers and batteries, causing explosions in mouth or pockets. E-liquid contained in e-cigarettes is very harmful for infants and can have adverse effect to their health. There is also a lack of information provided by the manufacturers regarding safety, use, and maintenance of devices, which restricts consumers from adopting e-cigarettes as an alternative to tobacco cigarettes.