As a broader base of potential younger buyers become interested in the expanding offer of open vapour systems and the wide assortment of e-liquids available, the main sales drivers for these products are affordability, convenience (discretion and portability) and performance (ranging from battery duration to vapour production). New lower-cost products provide consumers with affordable options, ranging between USD30.
In addition to the increasing relevance of more affordable vapour production devices, e-liquids continued to provide a wide assortment of flavour options and better value for money by focusing on larger packaging presentations (such as 60ml bottles sizes), with better unit prices per ml than 10-15ml sizes, which have been virtually discontinued in retailers. The ongoing value trend is expected to have a consolidation effect in terms of the number of brands available (mainly from the US), as lower-quality products are anticipated to face additional difficulties in competing against more recognised brands offering value proposals based on economies of scale savings derived from offering larger bottle sizes.
As a result of the popularity of vapour devices amongst a growing base of younger and mature tobacco consumers, additional levels of innovation are likely in the early part of the forecast period, with heated tobacco likely to make its appearance on the local scene. Philip Morris International is expected to launch its Iqos heated tobacco brand as its cigarette sales continue to contract.
In spite of the large number of small-scale import and distribution ventures in vapour products, the local retailer, Revolution Vapor, continued to lead, benefiting from the top-of-mind position of its retail brand and its assortment of open systems devices and e-liquids targeting a growing base of mid- and high-income consumers interested in quitting smoking. In addition to its well-designed physical outlet on the east side of San José (known for its concentration of universities and younger population) where potential buyers can benefit from personalised advice in terms of the best products for their nicotine intake needs, while trying different types of e-liquid flavours and qualities in a private and yet relaxed bar atmosphere, the company also has an on-line presence where it provides additional information about products in order to take advantage of the growing popularity of internet retailing amongst millennial consumers.
New products positioned between open and closed systems (using pods which include the coils), such as the recent launch of Revolution Vapor Envii Fitt, were the most relevant new product launches in 2017-2018. Instead of focusing on vapour production or affordability over time, this type of development actually relies on providing additional portability and use discretion, based on a compact design which requires buyers to purchase empty pods in order to continue using the device over time (resembling more of a closed system), whilst still allowing consumers to fill the pod with the e-liquid of their preference (more like an open system).
As cigarette consumption continues to undermine the core business models of the main tobacco manufacturers, leading players with a regional presence are likely to introduce vapour devices over the forecast period. While British American Tobacco Caribbean & Central America is expected to focus on closed systems which resemble the new Envii Fitt under its global Vype brand, Tabacalera Costarricense likely to launch its Iqos heated tobacco brand.
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