Vape Industry Grapples with Evolving Regulations and Sales Trends

vape industry regulation impact trends

The vape category faces near-constant flux as retailers balance staying compliant with ever-changing regulations while still meeting customer needs and preferences. As 2023 draws to a close, both vape product rules and sales trends continue morphing.

FDA Crackdown Highlights Compliance Struggles

This past year saw intensified enforcement from the Food and Drug Administration (FDA) as non-compliant vape products provoked repeated warning letters and fines to retailers across America.

The agency focused particular ire on fast-growing disposable brands like Puff Bar and Elf Bar which allegedly appealed overtly to underage users through unauthorized cartoon branding and candy-like flavors according to August warning letters sent to nearly 200 retailers.

Director of Marketing Nathan Arnold from Ohio/West Virginia c-store chain Duchess highlighted frustration around how violations by some businesses endanger overall category success:

“When some retailers don’t follow the rules, it continues to create pressure across the entire retail ecosystem. Restrictions placed on brands not compliant with marketing and labeling rules often lead to additional requirements for all manufacturers and sellers – even those operating properly. This overcorrection continues to hurt vape and tobacco profitability through mandatory signs, display regulations, and stricter ID checking protocols that frustrate customers and staff.”

But Brand Marketing Director Keelye Gaither from Kentucky retailer Key Oil emphasized that accountability helps demonstrate retailer commitment to customer well-being:

“I think that the FDA holding retailers responsible shows our customers that we take rules and regulations on tobacco products seriously. Avoiding warning letters through properly vetting our vendors demonstrates that we care deeply about what is sold in our stores and the health of patrons who shop with us.”

Still, she admitted confusion around distributor practices undermines retailer purchasing confidence given shifting legality surrounding brands and flavors. The instability introduces complexity around previously routine restocking.

2023 Vape Sales Trends Present Contrasting Pictures

Both dollar and unit sales metrics for vapes shifted significantly over 2022. While yearly vape dollar sales declined only -3.8% through October 8th according to analytics firm CIRCANA, unit volumes dropped a more dramatic -8.3% indicating potential down-trading to more affordable options.

Duchess foresees continued stagnation for the category amid regulatory constraints suggesting an extended retail plateau. However, the Kentucky Key Stop stores operated by Key Oil realized swelling vape revenues indicating pockets of geographic strength remain.

“So far, our vape sales have been growing steadily,” said Gaither. “Since August, we have seen a consistent growth of $700 each month for some of our vape products.”

Customer Priorities: Flavor, Value, Performance

Within stalled or declining broader sales, particular vape product attributes drove consumer purchasing in 2023. As local and federal policymakers limited flavor profiles through bans on fruit and dessert profiles, experienced vapers sought higher nicotine concentrations for satisfaction.

Marketing Director Arnold explained the trend at Duchess:

“We see customers demanding higher-nicotine vape products as flavored varieties face greater scrutiny. This migration towards tobacco and menthol flavors in higher concentrations allows us to strengthen sales even with fewer SKUs.”

Brand Manager Gaither also noted customer emphasis on stretchable usage and upfront pricing transparency at Key Stops:

“I believe the most important attributes people evaluate when purchasing a vape product are first, visible battery level and stated puff counts which relate to usage duration along with competitive pricing clearly communicated through shelf tags.”

So battery lifespan, extended liquid capacity, and puff count transparency ranked as top priorities allowing buyers to quantify and maximize their vape dollar value.

Disposables Under Pressure But Open Systems Benefit

As regulators squeezed certain disposable brands and flavors, long-time vapers moved towards customizable open pod system devices and refillable tanks. With ability to swap higher nicotine salt liquids to mimic combustible satisfaction, sidestep widespread disposable uncertainty, and maximize usage duration through component customization, open systems resonated increasingly.

Leading open system manufacturer Joyetech reported strong upticks in their modular eGO, CUBOID, and Atopack product lines which allow extensive personalization and performance upgrades. Officials credited regulatory pressure on all-in-one devices for driving experienced users to fully featured systems.

Meanwhile latest Nielsen xAOC channel data ending October 2023 showed disposables slowing but open vape segments accelerating nearly +25% for both device units and related accessories and e-liquids.

The shift shows how customer emphasis on customization and flexibility instead of pre-packaged convenience futureproofs retailer sales from additional shocks to certain regulatory constrained closed systems.

Looking Ahead to 2024 and Beyond

With possibility of national menthol cigarette bans on the horizon alongside continued uncertainty around allowable vape products, convenience retailers walk a tightrope balancing regulation adherence and category profitability.

Key Oil eyes potential expansion into CBD and delta-8 vapes pending federal marijuana rules changes thanks recent cannabis bill progress. But Duchess takes a more cautious product selection approach expecting further consolidation of major brands and private label growth.

However both retailers agree that agility and customer empathy matter most as regulations, sales and consumer interests continue evolving rapidly. Stores able to adapt business strategies quickly while supporting compliance and public health position themselves best for ongoing vape category relevance.

Matthew Ma