December 1, 2022
A landmark study, which for the first time measured the economic impact of the UK vaping sector, has revealed the growing preference for the convenience channel among the vape shoppers.
According to the study commissioned by the UK Vaping Industry Association (UKVIA), the share of the convenience channel in vape purchases has increased from 8 per cent in 2017 to 16 per cent in 2021.
Significantly, the channel has been able to steal a march on supermarkets, whose share increased by just two percentage points, from 7 to 9 per cent, in the same period. Meanwhile, the share of discounters has declined, from 11 per cent in 2017 to 8 per cent in 2021.
“There seems to have been a movement away from solely vaping retailers (both physical and online) to newsagents, corner shops and to a lesser extent supermarkets. This may have been caused by the Covid-19 pandemic where vaping retailers were forced to close, whereas newsagents/corner shops were allowed to remain open,” the report states.
“To satisfy demand consumers likely shifted their consumption pattern towards these open retailers, a trend which at least to some extent seems to have remained entrenched.”
The dedicated vape shops (physical) remain the most popular spending avenue for vapers at 33 per cent, but they have seen a 6 per cent decline from 2017. Online vape shops retained their second position with an 18 per cent share, decline of 2 per cent since 2017.
However, the report notes that the broader growth in the market over the same period needs to be considered when looking at these relative consumption trends.
“Over the entire period total consumption on vaping products increased significantly. Therefore it would be wrong to state that solely because the share of consumption in specific vaping retailers decreased, that the economic impact of this segment declined,” the report states.
Overall, the study by Centre for Economics and Business Research (Cebr) underlines vaping’s true economic value, highlighting the sector’s contributions to the national and regional economies, the jobs it creates, and the cost savings to the NHS, among others.
The report values the UK vaping industry’s aggregate turnover last year at £2.8bn. Besides, the sector supports almost 18,000 full time equivalent jobs in retail, manufacturing and supply chain and the estimated cost saving to NHS of adult smokers switching to vaping was over £300m in 2019 alone, the study has found.
The contribution vaping made to the exchequer through taxation was £310m in 2021.
“In little over a decade vaping in the UK has grown from very much a ‘cottage industry’ to one of the fastest growing sectors in not just retail, but the whole economy,” commented John Dunne, director general of the UKVIA.
“More people than ever are vaping and by all measures this is a true British success story, creating employment and wealth, generating precious revenue for the government through taxation while at the same time saving the NHS more than £300m a year through people switching from smoking to vaping.
“No wonder some of the world’s biggest retail brands are now extolling the virtues of vaping as they know how valuable it is both as a commodity and as a force for good when it comes to harm reduction.”
The vaping sector has also had wider socio-economic benefits, most notably the positive impact it has had on the health economy. Cebr’s report estimates that the total saving in healthcare costs associated with smokers switching to using vaping products was £322m in 2019. The research organisation goes on to say that “the potential healthcare saving if 50 per cent of all smokers switched to vaping” would have been £698m in 2020.
The gain in “economic productivity” associated with smokers switching to using vaping products was estimated to be £1.3bn in 2019, which, according to the study, would increase to £3.33bn if 50 per cent of remaining UK smokers switched to vaping.
“For some time now we have known that vaping supports smokers to turn their lives and health around by quitting for good, but now we know just how far this industry has come and what a massive impact it has had – and continues to have – on the health and wellbeing of the economy too,” Dunne said.