The spread of the vaping industry across the UK and its potential as a replacement for smoking
The rapid proliferation of vape shops across the UK has been one of the most visible changes to the high street in recent years. Between 2013 and 2018, the number of vape shops in Great Britain has soared from less than 100 to close to 3,000. These vape shops directly employ an estimated 5,700 workers and generated £1 billion in revenues in 2017 according to Euromonitor International. A growing number of smokers have already taken up alternatives to cigarettes such as vaping or heated tobacco, and with around seven in ten regular smokers intending to quit over the next ten years this trend looks set to continue in the coming years.
A survey commissioned for this research of 1,500 vapers and / or smokers in the UK finds that 68% of regular vapers have reduced their consumption of cigarettes since taking up vaping, while 16% have quit smoking altogether. According to the survey, pressure from loved ones and the NHS’ quit smoking services are the most important factors that aid this transition. The effectiveness of vaping as an alternative to smoking is highlighted by the fact that three-quarters of regular vapers in our survey believe that doctors should recommend e-cigarettes as a method of quitting smoking.
While the rise of vaping has very much been a UK-wide phenomenon, the prevalence of the sector does vary between regions. The North West of England stands out as the UK’s vaping hotspot, with roughly one vape shop for roughly every 2,000 adult smokers. Other areas in the North of England, as well as the Midlands regions, also have a higher than average density of vape shops. Meanwhile, the South East, the East of England, Wales and London have the lowest number of vape shops per adult smoker.
The regions with the highest concentration of vape shops also tend to have higher than average rates of vaping among the adult population, as is the case for the North West and Yorkshire. However, the small but not insignificant market share held by online retailers and supermarkets means that there are regions – such as the South West and Scotland - for which a high proportion of vapers is not accompanied by a high density of vape shops. Many individuals who take up vaping go on to substantially reduce their smoking, meaning that areas with a prominent vaping sector are likely to experience a fall in smoking rates. However, since smokers represent the primary source of demand for vaping, areas with a high prevalence of smoking tend to have a larger vaping sector.
The increased prominence of specialist vape shops has come alongside many other notable shifts that have taken place on the UK high street. Supermarkets have continued to increase in number since 2010, while more specialist food shops such as grocers and butchers have declined. The tough economic conditions in recent years appear to have left their mark on the high street, with sizeable growth in the number of used car dealerships, thrift shops and repair shops between 2010 and 2017. The rise of online retail has also contributed to a decline in electrical goods and clothing stores, which have struggled to compete with their online counterparts.
 Based on the results of a survey of regular vapers and surveys commissioned for this report.
Growth of the vaping sector
Rates of smoking have been on the decline in the UK in recent years, and many have turned to vaping as a means of helping them to reduce their consumption of cigarettes. This has led to a rapid expansion of vape shops across the UK, which have now become a common sight on the high street. According to data gathered by the Local Data Company (LDC), in May 2018 there were around 2,850 vape shops across Great Britain. This compares to a figure of less than 100 five years previously, meaning that Great Britain has seen a dramatic increase in the number of vape shops since 2013. Around 40% of the 2,850 vape shops recorded by the LDC were on premises that were vacant during the previous survey six months earlier. This highlights that the spread of vape shops has played an important role in reviving the high street during a time when many retailers have faced difficulties.
According to the ONS’ Business Counts and Business Register and Employment Survey, the number of workers per tobacconist has averaged just over two since 2010. Given the often overlapping product offering and the small and specialised nature of tobacconists and vape shops, it is likely that the number of workers per shop is comparable between these two categories of retailers. Based on this assumption, vape shops in Great Britain currently employ over 5,700 people. To put this into perspective, 2,500 people are currently employed by specialist music shops, a further 2,500 are employed in specialist fishmongers, and 11,000 work in grocery stores. It is worth noting that while around 5,700 people are employed directly by vape shops, the rise of this sector will also have generated employment gains and positive spillover effects in the supply chains for these products.
Figures released by Euromonitor International show that UK sales of vape products reached £1 billion in 2017 and are on track to reach £2 billion annually by 2020. The significant revenues and employment gains generated by vape shops coupled with the finding that a substantial portion of shops occupy spaces that were recently vacant show that the vaping industry has fast become a key sector for the UK’s high street and the wider economy as a whole.
Geographic distribution of vape shops
In 2013, there was one vape shop for roughly every 112,000 adult smokers in Great Britain. The embryonic state of the vaping industry in 2013 makes it difficult to draw meaningful insights into where the sector was most prominent, although the density of vape shops was significantly higher in the North West than in any other region.
Today, there is one vape shop for roughly every 3,000 smokers in Great Britain. While the growth of vape shops has occurred throughout the UK, the density varies significantly across the country. The North West is the undoubted vaping hotspot of the UK, both in terms of the absolute number of vape shops and the density of vape shops i.e. the number adult smokers per vape shop: the region has 456 vape shops, which equates to one for roughly every 2,000 adult smokers.
There is very much a north-south divide when it comes to the density of vape shops in England’s regions. The North East and Yorkshire & the Humber have the highest number of vape shops per adult smoker behind the North West, while the Midlands regions also have a higher than average density of vape shops.
The South East and London have the second and third highest number of vape shops in Great Britain in absolute terms. However, this largely reflects the large populations of these regions. When adjusting for the number of adult smokers, London has the lowest concentration of vape shops in Great Britain, with one for roughly every 3,300 smokers.
Rates of smoking across Great Britain
According to the Annual Population Survey, 15.1% of adults in the UK are smokers. Rates of smoking vary significantly across the country. The highest prevalence of smoking is observed in the North of England, Scotland and Wales, while lower smoking rates are observed in the South West, the East of England and the South East.
As Section 3 discusses in greater detail, vaping is a widely used and potentially successful method used by smokers to reduce their cigarette consumption. Given that some individuals who take up vaping go on to quit smoking, areas where the vaping industry has most taken off are likely to have seen a fall in the rates of smoking. On the other hand, since smokers are the primary source of demand for vaping products, areas with a prominent vaping sector could be expected to have higher rates of smoking. On the whole, the latter effect seems to dominate, since Yorkshire, the North East, the North West and the East Midlands all have higher than average rates of smoking as well as a higher than average density of vape shops. Meanwhile, London, the South East, the South West and the East of England have below average rates of smoking along with a lower than average density of vape shops.
Rates of vaping across Great Britain
According to the 2017 Opinions and Lifestyle Survey, 5.5% of people aged 16 and over currently use e-cigarettes, equating to 2.8 million people across Great Britain. A regional level breakdown of vaping rates is currently only available for 2015. However, the rate of e-cigarette usage among individuals aged 16 or over has risen from 4.5% in 2015 to 5.5% in 2017. The rates outlined in Table 4 below assume that this increase occurred proportionately across the country. The highest rates of e-cigarette use are found in the South West (7.7%), the North West (7.4%) and Scotland (6.7%), while the lowest rates are in London (3.9%) and Wales (4.5%).
It would be expected that the regions with the highest concentration of vape shops would be those with the highest proportion of vapers. This is the case for the North West and Yorkshire, which have among the highest number of vape shops per adult smoker together with high rates of e-cigarette usage. Similarly, London and the East of England – which have among the lowest numbers of vape shops per adult – also have a lower than average prevalence of vaping.
According to a 2016 study by Ernst and Young, only 35% of e-cigarette devices and 40% of refills are purchased in specialist vape shops, with online retailers and supermarkets also significant suppliers of vaping products. Therefore, while areas with more vape shops would in general be expected to have a higher number of vapers, this does not always have to be the case. For instance, the South West and Scotland have a lower density of vape shops than the UK average despite having among the highest percentage of e-cigarette users. One potential explanation for this could be that these regions are more sparsely populated than other parts of the UK, with a significant share of the population living in rural areas. As a result of this, many vapers in these regions could be purchasing e-cigarettes via the internet or larger supermarkets, as specialist vape shops are unlikely to have a sufficiently large customer base to sustain themselves in these less populous areas.
The rapid expansion of the vaping sector in recent years has coincided with a significant fall in the adult smoking rate in Great Britain: between 2013 and 2017, the percentage of adults who smoke has fallen from 18.8% to 15.1% (see Table 2). The two regions with the highest concentration of vape shops – the North West and the North East – have seen a greater than average decline in the adult smoking rate during this period. Meanwhile, Scotland and the South West – which have among the highest adult vaping rates in Great Britain – have also seen greater than average falls in smoking prevalence. It should be noted however that establishing a direct relationship between the prominence of the vaping sector and the prevalence of smoking is beyond the scope of this study.
Consumer survey of vapers and smokers
To supplement the above research on the spread of the vaping industry and its potential as an aid for stopping smoking, Cebr commissioned a survey of 1,500 adult vapers and / or smokers.
Success of vaping as a means of reducing smoking
Among the 750 respondents in the survey who vape at least once a week, nearly a quarter (24%) smoke slightly less than they did before starting vaping, 27% smoke far less than they used to, and 16% have stopped smoking altogether. Collectively, this means that over two thirds (68%) of regular vapers in our survey now smoke less than they did before they started vaping. At the last count (2017), there were an estimated 2.8 million vapers in the UK. Based on this and the results of the consumer survey, up to 448,000 people across the country will have quit smoking after having taken up vaping, while a further 756,000 will have significantly reduced their cigarette consumption. While vaping does carry some health risks, it is 95% less harmful than smoking according to Public Health England. Therefore the use of e-cigarettes as a means of reducing smoking has the potential to deliver significant health benefits.
Another potential alternative to cigarettes are heated tobacco products, which heat tobacco at a lower temperature than traditional cigarettes are burned. 29% of respondents in our survey have tried heated tobacco, while 16% use it frequently. Meanwhile, 42% stated that they had not heard of this category of product, highlighting that heated tobacco has yet to penetrate the market to the same extent that vaping has.