The market-share gap between the top-selling U.S. electronic cigarettes has shrunk over the past month with Juul holding about a 4.2-percentage point gap over R.J. Reynolds Vapor Co.’s Vuse.
The latest Nielsen analysis of convenience store data, covering the four-week period ending Feb. 12, determined Juul was at 37.9% market share and Vuse at 33.7%.
There has been a 4- to 4.8-percentage point gap between the two e-cigarettes for the last six Nielsen reports.
NJoy was at 3.2%, up from 3.1% in the previous report, while Fontem Ventures’ blu eCigs rose from 2.3% to 2.4%.
E-cigarette sales overall have slumped since February 2020, when the Food and Drug Administration implemented its latest round of heightened regulations on the products.
Those restrictions foremost required manufacturers of cartridge-based e-cigarettes, such as Juul Labs Inc., Reynolds Vapor, NJoy and Fontem, to stop making, distributing and selling “unauthorized flavorings” in February 2021, or risk enforcement actions.
Goldman Sachs analyst Bonnie Herzog said another factor in the slump is “the impact of e-cigarette market denial orders by the FDA as it continues to work through premarket tobacco applications.”
Herzog said the premarket tobacco application process “continues to weigh on e-cigarette trends.”
Juul’s four-week dollar sales have dropped from a 50.2% increase in the Aug. 10, 2019, report to a 6.9% decline in the latest report.
By comparison, Reynolds’ Vuse was up 40.4% in the latest report, while No. 3 NJoy was down 15% and No. 4 blu eCigs down 9.1%.
Herzog has said that NJoy “refutes Nielsen’s data and methodology.”
Traditional cigarettes
Industry analysts said the 4.9% dollar sales decline year over year for traditional cigarettes primarily reflects how inflation, particularly involving higher gas and energy prices, is leading more smokers toward lower-cost options.
Manufacturers have been able to offset some of the recent declines through a series of per-pack list-price increases in recent months.
The list price is what wholesalers pay manufacturers for their traditional cigarette products.
The increase typically is passed on to customers at retail.
For example, R.J. Reynolds Tobacco Co. implemented a 14-cent Reynolds list-price increase in January.
Counting a 13-cent per-pack increase on Jan. 28, 2021, 14-cent per pack hikes in April and July and a 15-cent increase in October, Reynolds will have raised its list price by 70 cents within a year for many of its top brands.
Altria Group Inc. matched the 14-cent Reynolds increase for most of its main brands, Herzog said.
Philip Morris USA’s traditional cigarette dollar sales were down 5.7% year over year, while Reynolds was down 4.5% and ITG Brands LLC was down 0.7%.
As of Feb. 12, Philip Morris’ top market share was at 51.5%, with top-selling Marlboro representing 45.6% of overall market share.
R.J. Reynolds Tobacco Co. was at 34.8%, with No. 2 Newport at 14.1%, No. 3 Camel at 8.5%, No. 4 Pall Mall at 5.2% and No. 5 Natural American Spirit at 4%.
ITG was at 7.7%, although ITG has said its market share is closer to 10%. Its Winston brand is No. 6 at 1.9%.
“The Marlboro price gap has grown appreciably, showing greater scope for discount cigarettes to cannibalize the sales of the big brands,” said David Sweanor, an adjunct law professor at the University of Ottawa and the author of several e-cigarette and health studies.
Sweanor said that with electronic cigarettes representing a $5 billion annual market, “the size and continued growth of that market raises questions about the desirability and even viability of FDA measures that would have the impact of giving far more toxic cigarettes a competitive advantage.”
“Clearly, consumers are seeking non-combustible alternatives to smoking cigarettes.”
“This very aggressive pricing continues to be a hugely profitable strategy.”
Richard Craver – Winston-Salem Journal – 2022-02-23.
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