A war is being waged against the UK tobacco industry. The government has set its sights on achieving a smokefree nation by 2030; in 2016, they spent £4 million of taxpayer money on anti-tobacco marketing, and on the 17th of May 2017, branding was banned from packaging.
The war is being won. In 2016, 15.5% of British adults were smokers, down from 19.9% in 2010. The number of cigarettes smoked in the UK has dropped by two-thirds over the past 25 years. In short, the future looks bleak for the tobacco industry.
But rising from the ashes is an entirely new sector that enjoys lower regulation and broader consumer appeal; Next Generation Products (NGPs). And without the barriers to entry that tobacco has, competitively, vaping is an open playing field: a field that’s growing, rapidly.
It’s predicted that the global vaping market will be worth $44.55 billion by 2024. NGPs are reshaping the tobacco industry, and the big players are taking the trend seriously.
BAT has invested over $1bn in its NGP division. PMI launched IQOS, an innovative heat-not-burn product, and told Reuters that they “certainly see a future where Philip Morris will no longer be selling cigarettes in the market”. And in a move that smacks of GM and Ford’s bid to compete with Tesla, Imperial Brands created an entirely new company in the form of Fontem Ventures, with research labs located in the Silicon Valley.
With big tobacco brands positioning themselves side-by-side with Google and Facebook, the NGP industry, particularly brand-wise, is not a game to be played using traditional tobacco tactics. This new lifestyle category is more akin to the fast paced high-tech and FMCG sectors than the traditional tobacco industry. With that in mind, here are four lessons vape brands can learn from FMCG.
Competition in vaping is fierce, restrictions on packaging and ingredients have already been introduced and the threat of increased regulation looms. It’s clear that vape brands must find a way to stand out from the crowd by building a value proposition that can sustain them over the long term.
Vape brands need to elevate their market position beyond the obvious label as a ‘smoking alternative’ – and there’s plenty of opportunity to define vaping as an aspirational lifestyle category.
In this sense, vape brands can learn from similar challenges facing other FMCG industries. Alcohol brands, for example, also need to differentiate themselves in the face of increasing regulation. Using provocative language in marketing, like Guinness’ ‘Made of Black’ campaign in Africa, will help vape brands grab the attention of consumers.
Fragrance brands suffer from a similar lack of differentiable product attributes; like vaping, perfume is pretty much just liquid in a bottle. But like perfume, brands can create lifestyle associations that go beyond the content itself. Endorsements from aspirational figures paired with powerful messages give brands weight, like Jennifer Lawrence’s feminist Dior campaign.
Vape products can own a brand of distinction by creating inspirational design assets. This can be achieved by mirroring examples from brands like Haagen Dazs, who rewrote the rules of ice cream by making it sexy and sensual, an adult experience that subverted expectations of the category.
On-shelf cut through.
Away from standalone vaping shops, retail display space for vaping products is limited. They are typically housed in the tobacco display gantry or on a counter top display unit. Eye-catching packaging, with easy navigation and distinct colours, is necessary to signpost the brand at the point of purchase.
On the FMCG front, our work with Scholl engineered their design to deliver fully ownable packaging assets to stand out on shelf. Every element and product is considered to have a role in promoting the brand and no space is wasted, ensuring Scholl products cut through the noise.
Heinz leads the way in leveraging a masterbrand strategy to support on-shelf navigation. A red thread runs throughout the packaging of every SKU, making the brand instantly recognisable. For the vape category where there are as many brands as there are flavours, a cohesive packaging language and masterbrand strategy could help new brands cut through.
The product itself needs to work just as hard. Although cutting-edge functionality is a must to win raving fans, an elegant, beautiful design is needed for on-shelf standout. The cosmetics industry does this well – for example, in 2016 Kiehl launched a limited edition range wrapped in artwork from FAILE to boost their Christmas sales. Vype has successfully taken this approach in the vape category with their design-led Pebble range.
Most vape brands are yet to establish emotive product truths that resonate with consumers. With food, you can tap into provenance. With alcohol, you can elicit images that connect to brand heritage (think of a small distillery cooking up fine whiskey in the foggy, peat-filled highlands of Scotland with Scottish water and oak casks). For established FMCG products, there are multi-layered brand stories to weave.
Vape products doesn’t have as compelling a story. The liquid is simply chemicals, the device is, in most iterations at least, pretty uninspiring, and there are very few product attributes to speak of. To break through, vape brands must tap into the behaviour of their consumers, selling the experience, not the liquid itself.
One way they can do this is to create brand ‘moments’. KitKat own coffee time with ‘have a break’; Pimm’s own afternoon summers with ‘Pimm’s o’clock’; Weetabix own breakfast by asking ‘have you had your Weetabix?’ By identifying ownable vaping occasions, vape brands can leverage moments in the same way that other FMCG brands have.
The tone of voice for many vaping brands doesn’t yet have the requisite confidence. Instead, brands are positioning themselves in a reactionary way, responding to market forces as they arise. So while some try and approach and broach tactical issues such as nicotine levels and vegetable glycerine, smart brands will focus on more strategic matters such as how to organise brand benefits, product claims and reasons to believe. These challenges are all FMCG.
The competitive challenges involved in this category are a far cry from those of the extremely price sensitive tobacco industry. For that reason, FMCG marketing techniques provide a much better benchmark than tobacco ones.
While many vape companies are looking at tobacco as the litmus test for what vaping should look and feel like, on balance FMCG provides much better markers for a successful vape branding exercise. Many of the big tobacco firms have recognised this, positioning their NGP business as an entirely separate function. The winners will be the ones who protect their vape brands from the wheels of corporate tobacco and sustain an innovative approach to design.