How The EVP Industry Can Help Aid SA’S Post-Pandemic Economic Recovery:
The rise of electronic vaping products (EVPs) has been likened to the smartphone revolution that took the entire world by storm. According to Statista, in 2007, smartphone sales stood at 122.32 million units. By 2020, more than 1 560.85 million units have been sold globally. It is predicted that the tobacco industry’s transformation towards risk-reduced products will have a similar rise: a report produced by Euromonitor International estimates e-cigarettes and vaping will be a US$ 34 billion business by 2021 – an increase of 176 percent from 2016.
While the major driver behind the growth of the EVP market has been a growing awareness of harm reduction benefits, other important drivers have been a factor, too. These include the increasing number of online platforms selling vape products as well as the variety of products itself – both of which have been driving down prices.
In recognition of the growing popularity of EVP on many fronts, tobacco companies are making significant investments in the development of next-generation vapour devices as well as a wide range of vape juice flavours. Enter, for example, British American Tobacco’s (BAT) recent acquisition of leading South African vapour product company Twisp in late 2019.
Enabling the growth of the vaping model, therefore, makes increasingly good business sense to any economy – and that’s in business-as-usual times. Now, with the economic pressures of COVID-19, it makes even more sense as a possible vehicle for economic growth within a relatively new but already thriving market; a contribution South Africa’s economy desperately needs post the pandemic.
The most significant contribution the vaping industry can make towards post-COVID-19 recovery is enabling entrepreneurship and job creation, notes Asanda Gcoyi, CEO of the Vapour Products Association of South Africa (VPASA). “We need to see this kickstarted as soon as possible.
“Before COVID-19, strong sales were driving the establishment of a robust range of supply channels – both in brick-and-mortar shops as well as online retailing, while an ever-growing demand for new flavours was driving the manufacturing process.”
With many shopfronts shuttered during the lockdown, stores, manufacturers and distributors in the local EVP industry face closures and VPASA fears that – for those who are able to retain a footing post-lockdown – the pending tax may further hamstring an industry whose focus is providing a less-harmful alternative to tobacco.
Adds Gcoyi: “It begs the question whether the government understands that vaping is indeed a more sensible and less harmful alternative for nicotine consumers. Available evidence from leading international scientific institutions points to vaping as being 95 percent less harmful than combustible tobacco products. In a country where health is now even more of a concern than ever before, any industry that encourages harm reduction should be embraced with open arms.
“What the government should be doing is enabling and stimulating the EVP industry further to gain the benefits of the entrepreneurship, job creation and skills development opportunities it would afford thousands of South Africans at a time the country will need it the most.”
Despite companies like BAT entering the local e-cigarette market, the EVP industry in South Africa is still represented primarily by small to medium enterprises (SMEs). And job creation has certainly been a significant outcome of that: in 2018, a report prepared by Canback Consulting estimated that the industry had already created more than 4 000 jobs in the wholesale and retail sectors. It further estimated that, at an expected growth rate of 13 percent annually, it could conservatively create well over 10 000 jobs by 2027.
Among the SMEs driving the growth of the EVP industry is Lenasia-based Joose-E-Liqz, whose managing director, Naeem Hoosen, started after he himself took up vaping to quit smoking in 2015. Originally involved in the auto care industry, Hoosen started producing his own flavours, many of which he shared with friends and family members in an attempt to help them quit smoking, too. Eventually, the potential he saw in his product led him to start a business in the vapour e-liquid industry.
With three staff now in his employ, Hoosen feels the growth of the industry and the associated job creation must be crucial to the decisions government will take on its future: “If we can get our government and health professionals to realise, on a public level and due to the vast number of studies done, that vaping is far less harmful than combustible tobacco then this will give more smokers the confidence to make the switch. With a lower tax rate than combustible tobacco and some favourable regulations, the industry will grow.”
In Durban, Hugo Ross is a director of Sir Vape, a vape store and e-liquid manufacturer and distributor started in 2014 when he could not locally find e-cigarettes of the quality being produced and sold in the USA and the UK. In particular, Ross was looking for products that would satisfy a smoker enough to want to quit regular cigarettes altogether. Today, Ross has a staff of 14 and a wholesale distribution network that supplies more than 250 stores across the country.
Where he sees the greatest potential for the industry in South Africa is in the fact that it is still a relatively new sector that requires particular skill sets in terms of both development and retail. “Companies are still growing and new job opportunities are still opening in retail and manufacturing, so there is no doubt that this industry will create many jobs down the line,” he says.
After COVID-19, the nation will rely on what every industry can bring to the table to restart the economy as soon as possible. If a contribution comes in the form of a product that is less harmful than the current norm while creating a myriad job opportunities, it’s a win on many fronts.
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Quick Durban KwaZulu-Natal Fact: From the beautiful buildings of yesteryear, to Durban’s brand new architectural icon – Moses Mabhdia Stadium. Built for the 2010 FIFA Soccer World Cup, the stadium was designed by German firm, GMP Architekten. Named for the former secretary general of the South African Communist Party, the stadium boasts state-of-the-art technology which maximizes light, protects spectators from wind, and still allows a free view outwards. Situated on a raised platform to enhance its visibility, the stadium can be seen from as far away as Ushaka Marine World. The iconic arch houses a skycar which gives unparalleled views of the city and coastline.
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