Market value

The analyst’s view: The value of e-cigarettes and nicotine replacement therapy (NRT) may look very similar, but this doesn’t tell the full story. The market research company that collects this data – IRI – takes its figures from supermarkets, and multiple and independent pharmacies. The e-cigarette market is likely to be worth much more when you count sales from online retailers such as Amazon or specialist e-cigarette shops, says Peter Murphy, director of health and beauty accessories at IRI. “For e-cigarettes, you’re probably only picking up half the market,” he explains.
 

Market growth*

The analyst’s view: Looking at the figures, you’d be forgiven for thinking that the popularity of NRT is waning as customers move on to e-cigarettes. But Mr Murphy is “not entirely convinced” there is a link between the two trends – pointing out that the value of NRT has steadily been increasing since e-cigarettes came onto the market. This is the first year the category has registered a decline – and it has little to do with competition. Instead, the decline was driven internally by supply problems with NiQuitin lozenges, which began in March 2014 and have only “very recently” ended. “Volume was lost from the NRT category so it’s about 7% lower than it would normally be,” he says.

Mr Murphy adds that the 12% increase in e-cigarette sales actually represents a slowing of the category’s growth. “Over the past five years, retailers have started stocking more and more of the products. Now it’s reached saturation point, so you’re seeing it start to flatten out,” he explains.
 

Unit sales

The analyst’s view: In terms of unit sales, e-cigarettes are clearly outperforming NRT. This is fuelled by sales of e-cigarette refills, which are “regular purchases at a lower value” than NRT sales, says Mr Murphy.
 

Top 5 best-sellers

The analyst’s view: Gum is the most popular form of NRT delivery, placing Nicorette in a strong position, says Mr Murphy. Lozenges are the second most popular form, accounting for Nicotinell’s place as second best-selling product. Until last year, NiQuitin lozenges outsold Nicotinell’s version, but they fell out of the top five due to supply problems, Mr Murphy explains.

When it comes to e-cigarette brands, the market is volatile. Mr Murphy says the third and fourth best-selling brands – Vivid and Blu – went from being worth nothing in 2013 to combined sales of more than £25m in the past year. Sales of Nicolites, on the other hand, have fallen “quite considerably” by nearly £10m to £25.3m.
 

All quoted data is provided by IRI: 52 weeks to August 8, 2015 for NRT products and 52 weeks to September 5, 2015 for e-cigarettes

*Compared with previous year