Better staff training, greater category knowledge: JTI’s new head of reduced risk products Nick Geens is on a mission to help retailers find success in the e-cigarettes and vaping market. Tom Gockelen-Kozlowski speaks to him
With high margins, fast-paced innovation and steep growth all in its favour, the casual observer might see the e-cigarettes and vaping market as a rare piece of unalloyed good news for convenience retailers in an otherwise challenging sector.
Yet, while tobacco sales consistently fall and these new products’ sales rise, not all of the bounty is going to the loyal CTNs and local retailers who have long relied on the footfall brought by smokers.
It’s a fact not lost on Nick Geens, head of reduced risk products at JTI: “Currently this market is worth £160m and the opportunity to generate profit and new consumers is key for retailers. The challenge is, with vape shops popping up in their area, many independent retailers are wondering how they can make sure people stay in their shops to buy their particular products.”
It is this challenge that will shape JTI’s strategy in 2018, as the company looks to educate retailers about the category, ensuring they have the best range possible.
“Of course, they cannot have the same range of products as the vape stores but having the right knowledge will make sure customers stay shopping at their local shop,” says Mr Geens. “That’s the key opportunity.”
And when it comes to ensuring that retailers’ knowledge is adequate, he admits there’s work to do. “We’re working on this market full time and we think it’s all clear, but retailers have so many products in their stores and we must make sure that the offer is completely simple to understand for consumers and retailers.”
In the latter case, this is particularly vital, Mr Geens says, “because they’re the ones usually getting all the questions from customers.
“We spend a lot of time on education for retailers explaining how the products work – what the difference is between open tanks, closed tanks and the old cigalikes,” he adds.
To take this a step further, the company has just invested in a team of Logic Champions, specialists within the company’s sales team who can help reps and retailers improve their knowledge about the category.
“We bring them to head office, we train them, they get shown around the lab and development centre,” he says – with the objective being that they can help give retailers everything they need to answer any customer queries. It dovetails with the support that is already available on the JTI Advance website.
If category awareness is a challenge for retailers and JTI alike, the company feels more confident in its portfolio of products.
“The big opportunity today is the tanks and bubbles,” says Mr Geens. “These are the products used by the biggest number of vapers in the UK.” JTI’s e-liquids system is Logic LQD and, in a sector with many smaller suppliers, the brand awareness LQD offers gives the range credibility, he says.
Meanwhile, Logic – the brand the company brought to the UK from the USA in 2015 – also carries both its cigalike Curve and its closed tank Logic Pro system.
Mr Geens says it is the latter that offers the most exciting opportunity for retailers: “In the longer term, products that generate a little more loyalty are probably in the interest of retailers as well. The closed tanks – like Logic Pro – have custom capsules so once they have a Logic Pro device, people will generally go back to the same shop and buy the capsules. You don’t have that loyalty – or much less loyalty – with liquids because people can go into a vape shop today, they can go online the next day. In the interest of retailers it’s great to have a ‘closed ecosystem’, as we say: we think it will retain footfall in the stores.”
There is external evidence of Logic Pro’s success too. Recent Neilsen data recently put the product as the UK top seller while it was also recognised at the 2018 Product of the Year awards.
Although Mr Geens says he expects Logic Pro and LQD to be the focus of JTI’s activity in 2018, there is one product that is so far missing from the company’s portfolio: a heat not burn device.
Currently, Philip Morris has grabbed the headlines for the IQOS system in the UK, yet in Switzerland, Canada, the US and Japan JTI has also launched into this new market. The judgement of the JTI team, however, is that the UK market isn’t ready yet.
“Once we see the demand we are ready to a launch very rapidly.”
However, there is a sense at JTI – a company that has seen regulation gradually stymie its ability to operate in the tobacco market – that this is a market with an exciting future.
“I think the future is still bright for vaping. In the UK, in contrast to Europe, regulators seem to have an open mind when it comes to vaping. There’s an increasing number of sources such as Public Health England that have provided official statements that vaping is at least 95% less harmful than traditional smoking,” Mr Geens says.
Internally there are even hopes that, in time, the advertising ban on these production could be overturned.
First off, however, as a former prime minister once put, it’s: education, education, education.