by John Wiesehan Jr.

CEO,
Mistic Electronic Cigarettes

South of the Border

The $90 Billion Market Opportunity
THE PROLIFERATION OF ELECTRONIC CIGARETTES IN THE U.S. HAS STIRRED
MUCH DEBATE BOTH INSIDE AND OUTSIDE THE COUNTRY. THE TREND IS
SO POPULAR THAT SOME HEALTHCARE AND CONSUMER ADVOCATES ARE
CONCERNED THAT ELECTRONIC CIGARETTES WILL MAKE SMOKING FASHIONABLE
AGAIN, CREATING A NEW BREED OF VAPERS.
This viewpoint is understandable given some
the lifestyle marketing campaigns among a few
e-cigarette companies. We believe that electronic
cigarette manufacturers should only be targeting
adult smokers, educating consumers on this unique
alternative to traditional tobacco, rather than trying
to make vaping hip or cool.
Despite the great strides made over the past few
decades helping people quit, cigarette smoking
is the leading cause of preventable death in the
United States, according to the Centers for Disease
Control and Prevention (CDC), accounting for approximately 443,000 deaths each year. Moreover,
the economic impact of smoking is devastating,
generating $193 billion in annual health-related
economic losses.

THE MARKET OPPORTUNITY

Regardless of the health concerns, an estimated

45.3 million American adults continue to smoke
cigarettes. The good news is that nearly 70 percent
of these smokers want to quit completely. For many
of these people, however, conventional smoking
smoking traditional tobacco as does an electronic
cigarette.
Thats why the e-cigarette industry is growing at
a record rate, probably reaching $2 billion this year.
According to Wall Street estimates, the e-cigarette
category in the U.S. alone is expected to reach $90
billion in sales over the next 10 years. Findings from
the Wells Fargo Securities Inaugural E-Cig Forum
sive growth and market opportunity for electronic
cigarettes, reporting that there is vast opportunity
for the category and it is only just getting started.
that these devices work just as good, if not better

28 January | February 2014

than conventional smoking cessation products. A

University of Auckland study of traditional smokers
looking to quit found that 7.3 percent of e-cigarette
users had quit within six months, compared with 5.8
percent of those on nicotine patches. The study also
found that 57 percent of e-cigarette users cut their
daily cigarette intake by half, compared to only 41
percent of people using patches.
The medical community also may be coming
around. A Wells Fargo public health panel that was
moderated by David Sweanor, adjunct professor
of law at the University of Ottawa, revealed that etional cigarettes and offer a compelling alternative
to smokers. The panel of leading healthcare experts
also concluded that more research is needed as well
as sensible regulation, but found there is broad bevast public health opportunity.

THE E-CIGARETTE DIFFERENCE

The words vape or vaping are derived from

water vapor, which is emitted when someone draws
or takes a puff on an electronic cigarette. The e-liquid
is heated until it produces a mist. There is no smoke,
ash, smell or even staining. In fact, most electronic
cigarettes contain only a handful of ingredients,
glycol, which is used as a binding agent in many
food products and has been generally recognized
as safe (GRAS) for consumption by the FDA. This is
a sharp contrast to traditional cigarettes that contain
a deadly mix of more than 7,000 chemicals, many of
which are toxic and cause cancer.
People who enjoy smoking like the idea of an alternative to traditional tobacco. Smokers also like
the way e-cigarettes mimic tobacco cigarettes. While
municipalities in the U.S. are working to establish local laws where electronic cigarettes can and cant be

used, most places accept their use where

traditional cigarettes are prohibited.
Theyre less expensive, too. The cost of
most electronic cigarettes is considerably
lower than tobacco cigarettes, making it
very attractive to traditional smokers. A
pack per day smoker of traditional tobacco cigarettes in the US spends an average of $2,200 annually. For example, the

THE COST EQUIVALENT

FOR MISTIC REFILL
CARTRIDGES COMPARED
TO A PACK OF
CIGARETTES IS ONLY $1,
MAKING IT 83 PERCENT
LESS EXPENSIVE THAN
TRADITIONAL TOBACCO
CIGARETTES.

compared to a pack of cigarettes is only

$1, making it 83 percent less expensive
than traditional tobacco cigarettes.

HIGH MARGINS AND GLOBAL

EXPANSION
The e-cigarette category has enormous
potential to be a valued player in the
global retail sector. Same store sales are
rapidly growing for e-cigarette brands
like Mistic that have implemented a
razor-razorblade model. Because
e-cigarette products are rechargeable,
repeat sales offer high revenue growth
opportunities, with margins reaching the
mid 40 percent range by 2017, according
to Wells Fargo Securities.
Despite the fact that some countries

[Canada] dont allow the sale of nicotine-infused

electronic cigarettes, U.S. companies are exploring
international expansion through acquisitions. Many
e-cigarette brands also offer zero percent nicotine
based Lorillard recently acquired SKYCIG, a premium brand of e-cigarettes based in the United
Kingdom, while other American companies are expanding their retail footprints through international
distribution.
While all signs point to continued disruption of
the global $500 billion tobacco market by electronic
cigarettes, regulation still hangs in the balance, as
tion of rigorous high-quality standards. The recent
decision by the European Parliament declining to
ban e-cigarettes speaks volumes to the continued
growth of these devices as unique alternatives to
traditional tobacco. Theres no doubt that electronic
cigarettes will win in the end, sooner than later, and
that time may already be here.
Mistic electronic cigarettes and vapor products
are sold in approximately 40,000 retail outlets across
the country, including Walmart, Walmart Neighborhood Market Stores, Rite Aid Drug Stores, Kangaroo Express, Circle K, Winn Dixie/Bi-Lo, Food Lion,
among many others.

CONVENIENCE & CARWASH CANADA

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