NEW YORK (MainStreet) — The sale of vaporizers and e-liquids exceeded electronic cigarette sales for the first time by $500 million, according to Wells Fargo data.
"Open system vaporizers are quickly gaining in consumer confidence with electronic cigarette users moving towards these more powerful, tank-style devices," said Bonnie Herzog, managing director and senior beverage and tobacco analyst with Wells Fargo Securities.
An open system allows smokers to purchase a liquid nicotine solution and re-fill it themselves.
"E-liquids and vaporizers are proliferating as part of a sub-culture within certain circles," said Ata Gonzalez, CEO with GFarmaLabs, a cannabis edibles company in Los Angeles. "Over time these sectored user bases are sure to grow."
Because e-liquids are stored in tiny glass vials, ingredients can be aged much like whiskey and rum are in oak barrels.
"The flavor alteration options are endless from strawberry to banana to mojito, which shows an artisanal growth and sense of care in the industry much like we have in the marijuana trade," Gonzalez told MainStreet.
Sales of vaporizers have been so brisk for Vaporin Inc (VAPO) that the vaporizer company is now introducing a cannabis vaporizer line designed for dry herbs, oil and wax.
"We are well positioned to capture a significant share of a market projected to reach $10 billion by 2017," said Scott Frohman, CEO with Vaporin in Miami.
Vaporizers now contribute more than $1.5 billion to the overall electronic vaporizer market in the U.S. with electronic cigarettes accounting for only $1 billion. That may be because users spend 30% less when using a vaporizer as opposed to e-cigarettes.
"People are moving to vaporizers because they are cheaper than disposable cigarettes, they allow you to vape longer because of a bigger tank and vaporizers have a more powerful battery," said Alexandre Prot, CEO with Smokio.
E-cigarettes are more expensive, because their batteries require smokers to throw them away after discharge since they are not rechargeable.
“Vaporizers typically have a higher up-front cost to the consumer but those consumers using vaporizers to quit smoking over time find they are less expensive than traditional tobacco cigarettes and electronic cigarettes,” Frohman told MainStreet.
With vaporizers, heating elements can be replaced, e-liquid can be refilled and batteries can be recharged.
"Electronic cigarettes are featured in many convenience stores and gas stations nationwide but have very few flavors and nicotine strengths," said Frohman.
Just six months ago, open system vaporizers gained 60% of all U.S. vaporizer sales with vape shops fueling the increase, according to Vaporin data.
"Vape shops are setting up the e-liquid equivalent of wine tastings," Gonzalez said. "The uniqueness of the e-liquid and vape market will continue to evolve to provide users a smoking experience that may eventually become associated with a sense of luxury."
Domestically, the combined electronic vaporizer market is now estimated at $2.5 billion and growing.
--Written by Juliette Fairley for MainStreet