BAT predicts 53 million vapers outside the USA within 3 years

A week or so ago, British American Tobacco presented to investors assembled under the auspices of the Deutsche Bank. A key message -- one that has been repeated by this company and its global rivals -- is that the cigarette business has now been transformed into the nicotine business.

This presentation makes a contribution to the growing data on who is using vaping products and why, and helps answer questions whether these products are aimed at switching existing smokers from conventional tobacco use, or recruiting former smokers back into nicotine use, or giving smokers something to use in addition to cigarettes. The answer, it would appear, is all of the above.

Only one-quarter of the vapers in the 12 markets they survey are people who have stopped smoking. This is roughly the same as the combined number of people who started using nicotine in this way after having quit smoking (10%) or those who had never been smokers before (12%).

BAT is predicting that by 2020 this market will pull GBP 10 billion a year (CAD 16.8 billion) out of the pockets of 56 million users who live outside the United States. If the profile of the market is maintained that would suggest that within three years 6.7 million never smokers will expose themselves to the risk of nicotine addiction by vaping, and 5.6 million former smokers will return to nicotine use. There would be 12.8 million smokers shifting to vaping and 30 million smokers using both cigarettes and vaping products.

What drives vaping, the report suggests is "social consideration and hygiene" and "flavour experiences".

The other main category of next generation products (NGP) sold by BAT is heated tobacco products. BAT's main product in this category is the GLO cigarette, which they launched in Vancouver last month.

This investor presentation showed some of the marketing around that product launch: a clubbing event, special retailing and some hipster presence. These promotions show that there is plenty of room left in the federal Tobacco Act for tobacco products to be presented with some marketing sizzle!