formats and flavours. Flavour bases include ranges within fruit, beverages, coffee, menthol, mint, dessert, sweet and, of course, tobacco. Australia produces several dozen e-liquid brands and e-liquids are available online to local consumers from brand producers from not only the US and UK but surprisingly, countries such as Malaysia. A fast-growing market According to a 2016 Euromonitor report, the number of vapers globally quintupled from seven million people in 2011 to 35 million in 2016. Currently, the global number of vapers is between 40 and 45 million, or around 4 per cent of the world’s one billion smokers and is set to hit 55 million by 2021. By Euromonitor’s calculations, the value of the global vaping market has similarly quintupled in the five-year period from 2013 at US$4.2 billion to US$22.6 billion in 2018. It’s forecast to hit US$34 billion in 2021, with an impressive 15 per cent-plus CAGR over 2017 to 2023. Globally, the top 10 markets for vape products are: the US, Japan, the UK, Sweden, Italy, Algeria, Norway, India, Germany and China. Europe, led by the UK, is expected to account for more than 30 per cent of the global market share by 2023, by which time the APAC region is expected to have the largest overall share. In the UK, vape usage is 4 per cent of the adult population and 20 per cent-equivalent of combustible cigarette smokers. According to the Australian Institute of Health and Welfare, 12.2 per cent of Australia’s population are daily tobacco smokers. Nearly one-third of smokers had tried e-cigarettes in their lifetime, but only 4.4 per cent of them use them on a regular basis. This would equate to approximately 2.94 million smokers and around 129,000 regular vape users. Major industry players include the tobacco giants Philip Morris, British American Tobacco, Imperial and Japan Tobacco International. But the jewel in the industry crown is Juul. According to The Information in June 2018, “every eighth grader’s favourite e-cig” was worth US$15 billion from virtually nothing in 2015. It accounted for two-thirds of the US e-cig market, to the extent that “juuling” has become a verb for vaping. In December 2018, Philip Morris owners Altria announced their acquisition of a 35 per cent stake in Juul. Conferences and cloud contests E-vapor and HnB (Heat not Burn) tobacco vapor products are mainly sold through retail distribution channels such as convenience stores, specialty vape shops, tobacco shops, grocery shops, pharmacies and other retail outlets. They are also available online through e-commerce portals and online direct-to-consumer stores such as Amazon, eBay, Alibaba and AliExpress, and specialty vape online stores. In the 2015 EY study, 35 per cent of e-cigarette users surveyed across the UK, France, Germany, Poland, Italy, Russia and South Korea bought their devices in e-cigarette shops. The next-largest channel was online, at 22 per cent, with tobacconists third at 17 per cent. In the US, nine retailers that sell e-cigarette and vape products made the 2018 Internet Retailer Top 1000 rankings. The UK Vaping Industry Association (UKVIA) says there are around 2000 UK vaping outlets. In the US, Yelp identifies 10,600 outlets in its database as vape shops. Las Vegas, the vaping capital of the US, has 6.8 shops per 100,000 people. The city also has a lot of vaping tourists, particularly for vape trade conferences and the Vape Capitol Cloud Championships – one of the largest vape “cloud contests” in the US. It’s not easy to get a gauge on the number of vape specialty shops in Australia, as opposed to regular tobacconists (and there’s obviously going to be overlap, such as Smokemart). But a cursory Google Maps search of the area near my home in inner-western Sydney returned 30 results alone. Flavours lure the vulnerable In the 2015 Ernst & Young study, the most common reason given by respondents for using an e-cigarette was that they are “less harmful than regular cigarettes” (50 per cent).  About 49 per cent of regular users said they used e-cigarettes in order to curb their smoking habit, 47 per cent said it bothered fewer people than smoking, 42 per cent claimed there were more places to vape than smoke and, tellingly, 41 per cent said it was the availability of different flavours. Additionally, rising cigarette prices make vape pens and e-cigarettes a more economical alternative. While those in the industry claim that the vast majority of vapers are those quitting tobacco smoking, there are some indicators that vaping is being indulged in by non-smokers. Vaping is increasing at a faster rate than tobacco is decreasing. In an EY/Kantar study of nine European markets in 2015, 16 per cent of participants used nicotine-free e-cigs most often. And it can’t be mere coincidence that a significant number of the highest per capita vape towns in the US are college towns. Or that US west coast states, particularly California, have some of the lowest rates of tobacco smokers but higher rates of vaping. A recent South Australian study (a state whose November 2018 bill is the most stringently anti-vaping in the country) indicated that vaping could be a “gateway” product and that it had the potential to “reglamourise” smoking to teenagers and other vulnerable groups. In a California trade study of 77 vape retailers, they profiled customers as friendly, health-conscious and interested in tobacco cessation. Retailers also believed e-cigarettes were used recreationally or as products that help curb other addictive behaviours. While most retailers reported positive experiences with vaping, some had potentially negative experiences, including failed cessation attempts, dual use of e-cigarettes and combustible cigarettes, and increased nicotine dependence. Public Health England’s latest report on vaping highlighted evidence that e-cigarettes are less harmful than regular cigarettes, and that there was no evidence so far to suggest that e-cigarettes might encourage young people to take up smoking. The PHE has also recommended that e-cigarettes should be available on prescription, because of their role in helping people give up smoking. However, the World Health Organisation has cited several health concerns associated with vaping, pointing out that: The long-term effects are unknown; Nicotine in the liquid that is vapourised in an e-cigarette is addictive; Users replacing the liquid in refillable e-cigarettes might spill the product on their skin, possibly leading to nicotine poisoning; Some sweeter flavours of e-cigarettes are irritants, potentially causing inflammation of the airways. A recent study of electronic cigarettes found that more than half of the e-cigarettes sold as “nicotine-free” in Australia actually do contain nicotine. The researchers also found an acutely toxic chemical used in insecticide was present in all the products they tested. Keeping the customer comfortable In the California vape trade study, vape retailers reported that they regularly answer questions about vaping and believe their shops function as social lounges that are tied to other recreational activities. Retailers attach certain characteristics to their clientele, perceive certain health benefits associated with vaping, and seek to establish their shops as places that provide guidance on vape products as well as shops with a recreational aesthetic. This tallies with what I observed in Auckland, where most vape shops had stools and lounges for customers to relax in while enjoying the product, in another parallel with the food and beverage or alcohol “on premise”. Most stores I saw in Auckland were middle to highbrow – there were no “dodgy brothers”. One in particular was very upmarket, promoting craft liquids, with significant scrolling digital branded displays in the windows and products displayed elegantly in solid mahogany wood cases. Many retailers, including online stores, have kit deals such as device plus two to three pods for $35 to $45. The market is reasonably sophisticated, even for one that is in its relative infancy. It remains to be seen whether Australian state regulators, which currently vary widely from the draconian in South Australia and Queensland to the merely confusing in NSW, can take a holistic viewpoint.* *Disclaimer: Norrelle is a non-smoker, non-vaper who has never worked in the tobacco industry but has worked in gaming and liquor. Norelle Goldring has 20 years’ experience in retail, category, channel and customer strategy, marketing and research, working with global retailers, manufacturers and consulting houses. Contact: 0411735190 or norrellegoldring@hotmail.com