Industry Post-Regulation. E-Cigarette Summit Tim Phillips, ECigIntelligence. 17 th November

Transcription

1 Industry Post-Regulation E-Cigarette Summit 217 Tim Phillips, ECigIntelligence 17 th November 217

2 Agenda Post-TPD: Has regulation been a success? Heated Tobacco: a success? Innovation: what next? 2

3 TPD: Has it been a success? Products notified: c. 15,; 32,+ in UK Companies notifying: 2,5+ EC s Common Entry Gate stretched to breaking: Peak: 4, submissions in one day; averaged 1,+ per day huge problems with early notifications, system now upgraded Peak of activity pre November 216 and May 217 deadlines More submissions per company: increasing confidence in the regulatory system? 16, 14, 12, 1, 8, 6, 4, 2, Total E-cigarette product submissions Submissions per Notifying Party 3Q 216 4Q 216 1Q 217 2Q 217-3Q 216 4Q 216 1Q 217 2Q 217 Source: European Commission; October 217

4 Continuing growth in sector since TPD Most EU countries continue to show growth following TPD implementation Well developed markets slow growth or static; new markets growing rapidly Many US companies entered EU while uncertainty over Deeming Regulations 9,, 8,, 7,, 6,, 5,, 4,, 3,, 2,, 1,, United Kingdom United States of America France Russia Germany 1% 9% 8% 7% 6% 5% 4% 3% 2% 1% % % change Source: ECigIntelligence, September 217 4

5 How much of EU market captured by TPD? In many countries, regulations only apply to nicotine containing e-liquid Shake and Vape: definition? huge cost savings for consumers consumer demand for larger volumes no notification requirement Many markets confirmed no enforcement against shake & vape; for others, emerging area of law 6% 5% Estimated % of total market using non-tpd product.6.5 Price of e-liquid ( /ml): TPD 1ml vs Shake&Vape 3% average price difference 4%.4 3%.3 2%.2 1%.1 % Germany France Italy Poland United Kingdom. Germany France Italy United Kingdom 1ml bottle 6ml short fill + 1ml shot Source: ECigIntelligence consumer survey 217 5

6 Nicotine strength: consumer preferences suit Shake&Vape Among advanced tank users, predominance of 3 and 6 mg/ml liquid Shake & Vape products generally cater to these consumers (5ml mg + 1ml nic. shot) 6% Nicotine concentration (mg/ml) among advance tank users 5% 4% 3% 2% 1% % No nicotine 3mg/ml 6mg/ml 12mg/ml 18mg/ml Other UK (n=334) France (n=8) Germany (n=24) Italy (n=96) Poland (n=1) US (n=646) Source: ECigIntelligence consumer surveys carried out during 217 6

7 However consumer demand for larger bottle sizes is global Consumers are using increasing volume of liquid as power of devices increases/nicotine concentration decreases US bottles have been getting larger, with growth in 6ml and 12ml this year at expense of 3ml and smaller 45% 4% 35% 3% 25% 2% 15% 1% 5% Bottle size (ml) of last e-liquid purchase in the U.S. % Source: ECigIntelligence consumer surveys, 216 n=5898; 217 n=4228 7

8 But price difference not as pronounced in US Although 1ml bottles are rare in the US, comparison of prices of 6ml with <15ml suggest smaller price difference Could be due to regulatory cost savings?.7 Price per ml online for different bottle sizes in the U.S., % 216 Average: $ Average: $ ml and under 3ml 6ml 1ml and over Source: ECigIntelligence 8

9 Total monthly visits Google Trends Heated tobacco (t-vapor): online tracking of strong growth Total monthly visits Google Trends 6,, 1 9 5,, 8 7 4,, 6 3,, 5 4 2,, 3 1,, 2 1 Notes: monthly visits to: IQOS (all official websites), discoverglo.com, discoverglo.jp, ploom.jp. Google Trends Keywords used: IQOS, Ploom Tech, Glo, Heated tobacco, アイコス (IQOS in Japanese); Google Trends data indexed to 1% Source: SimilarWeb and Google Trends, 9

10 Offtake share Total monthly visits IQOS in Japan: online traffic and sales correlation Japanese offtake share Total monthly visits in Japan 25 12,, 2 1,64,741 1,157,826 9,92,768 1,, ,981,516 4,9,215 5,652, ,, 6,, 4,, 5 1,461,59 2,65, ,, Q4 215 Q1 216 Q2 216 Q3 216 Q4 216 Q1 217 Q2 217 Q3 217 Note: Offtake share represents select C-Store sales volume for HeatSticks as a percentage of the total retail sales volume for cigarettes and heated tobacco units. Monthly visits to: iqos.jp

11 Heated Tobacco: new entrants in Japan 4,, IQOS Ploom glo 3,5, 3,, 2,5, Ploom officialy launched in Japan glo launched in Japan 2,, 1,5, 1,, 5, Notes: monthly visits to: iqos.jp, discoverglo.com AND discoverglo.jp, ploom.jp Source: SimilarWeb, September 217

12 IQOS traffic share globally: slow growth in non-japan markets 1% iqos.jp iqos.ru kr.myiqos.com iqos.com.ua iqos.co.il iqos.it iqos.ro iqos.de iqos.pt iqos.gr iqos.co.uk iqos.ch 9% 8% 7% 6% 5% 4% 3% 2% 1% % Source: SimilarWeb, September

13 Heated Tobacco: taxation benefit compared to combustibles 1% 9% 8% 7% 6% 5% 4% 3% 2% 1% % % Net excise tax rate; Heated Tobacco vs Combustible Cigarettes EU Country Source: ECigIntelligence August

14 Battery, mah Pod systems in US: new products focus on lower power 2,5 Established pod systems New pod systems in 217 2, 1,5 1, 5 $ $1 $2 $3 $4 $5 $6 $7 Starter kit or equivalent prices (USD) Notes: starter kits come with varying number of empty or prefilled pods Source: ECigIntelligence October

15 US Pods: majority refillable; nic. salts preferred Notes: xaoc/convenience Database from Nielsen Source: Nielsen data provided by Wells & Fargo Securities LLC Open pod system, 33% Easily hacked, 24% Closed pod system, [VALUE] Hybrid open / closed pod system, 19% Hard to hack, 14% Can t be hacked, 1% Notes: n= 21 pod system devices Source: ECigIntelligence 15