Global E-cigarette and T-Vapor Market

Market Overview

Smoking rates and the consumption volume of cigarettes have been declining on the global scale. In 2016, 5.5 billion cigarettes were consumed, a volume decline of 1.5% from the previous year and declined further by another 3-4% in 2017. Despite the decline in the cigarette market, tobacco related mortality remains the leading preventable cause of death across the globe. Consequently, health organizations and governments are on a look out for efficient smoking cessation products to reduce tobacco use. E-cigarettes and tobacco vapor products imitate the look and feel of the cigarettes but are assumed to release less harmful chemicals than tobacco cigarettes and are being touted as safe alternatives to tobacco cigarettes and thus as the future of the tobacco industry.

Increasing prices of cigarettes, rising health awareness, and product innovation and technological advancements of e-cigarettes are propelling the growth of the market. The ease of access to distribution channel, especially online websites and e-commerce sites, which provide market players with the scope to expand both locally and globally, continues to be one of the key drivers for the market. However, in the current scenario retail channels such as, convenience stores, vape shops, and tobacco users generate over 60% of the revenue, and remain the primary form of distribution. However, the growth of the market is dependent on the legal and regulatory framework, and taxation policies, which have been tightening across the globe. 

Open tank systems have become the predominant product type in the market due to their advanced technology, and features of customization and interoperability. However, closed tank systems which combine the pros of rechargeable e-cigarettes and open tank systems with their long battery life, more vapor formation, and large tanks are expected to be the fastest growing e-cigarette product segment. The market for t-vapor products, the adoption rates of which have increased multifold in 2017 in countries such as Japan, South Korea and Russia, are expected to triple in size by 2021. Over 70% of the revenue of t-vapor products comes from device sales, while rest is contributed by the sales of tobacco capsules and sticks.

While North America and Europe have been the leading markets for e-cigarettes due to early adoption of vape products in the regions, APAC is anticipated to dominate the market in t-vapor products. In Japan, which was the first country where t-vapor products were launched countrywide, approximately 30% smokers have already switched to t-vapor. Of the world’s 1 billion smokers, 700 million reside in APAC, and the region is currently grappling high smoking related morbidity and mortality, of the 5.5 million people who die from smoking-related illnesses each year, half are in Asia, thus making the tobacco pandemic a major concern to all stakeholders in public health sector. Moreover, most countries still have lax regulations and low taxation rate for tobacco products, thus providing players with an opportunity to introduce smoking alternatives in the market.

There  lies opportunity for introduction of t-vapor products in the European region, which has the highest smoking rate, globally. Moreover, since only a handful of players have launched closed tank systems and tobacco vaporizers, there lies immense untapped potential for the growth of these products in the market  across the globe. Furthermore, while e-cigarettes are cost effective, the price of t-vapor products are on the exorbitant side, providing opportunity to smaller players to launch more economical products to consumers.