By Norm Bour
The FDA decision has recently been handed down, and everyone in the vape space is on the firing line. But one of the most prominent targets of regulation and restrictions are the manufacturers of e-liquid.
From an industry with 300 to 500 (estimated) companies in 2013, to approximately 7,000 to 9,000 today, there has been a shift in the industry as we approach what I call “The Tipping Point.” Those that do not reach that point may not be around for very much longer.
Malcolm Gladwell, a prolific author and observer of societal patterns, identified in his first book in 2000, the point “where things change” and “how little things can make a big difference.” He identified events, situations and products that suddenly shift, which brings previously unrecognized products or concepts into wide view.
We see it all the time. What was unknown or little recognized can become an overnight event or sensation in the blink of an eye. Thank you Twitter, Instagram and Facebook.
Many products grow in popularity until they reach a point where they either go big or go home. Products or ideas; television shows, or movies come from “nowhere” and are soon everywhere. We see the same thing in the vape market.
“Amazing Juices Without a Market”
The full quote was, “I have never seen such a huge selection of amazing juices that cannot find a market,” and it was shared by a well-known owner of a popular e-liquid company. And most would agree.
Liquid companies can spring from nowhere and suddenly are everywhere you look. Propaganda E-liquids is a recent example. They have made an impact on the liquid market in just two years. How? Why?
Co-owners Nick DeNuccio and Nicholas Bull started the company in Feb., 2014 when DeNuccio was 18 and partner Bull was 21.
They started with just “a few hundred bucks, then got a loan from their parents for $5K,” DeNuccio said proudly.
When asked, “How did you take $5,000 and grow to manufacturing 100,000 bottles per month with that small amount of money?” His reply: “Extreme dedication. We didn’t spend a dime on anything personal for the first year and lived on PB&J. Everything went into marketing or hiring another salesman or attending a trade show.”
That response did not satisfy me since that is the route that most entrepreneurs take to launch any company. We drilled it down and he came back with: “We were on the phones all the time
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and networked wherever we could. And what really bugged us was that most of the juice companies out there were trying to be like everyone else and attempting to ride someone elses’ coattails. We swore to not do that.”
It’s called Competitive Positioning and very few brands do it properly.
“It’s so annoying to see all these flavors that are committing direct copyright infringement and trying to be someone else,” he added.
“What makes you unique?” I asked and DeNuccio replied, “We target the all-day vape users. We found that many people like the samples they try in the shops, but when they drip with it all day it gets old. With Propaganda you can finish a 30 ML bottle and still want another one.”
They normally use a 60/40 PG/VG mix which they found the best combination for longer term satisfaction, and offer four flavors on their primary line plus the newly released “Hype Collection.” The new addition has been well received and is pushing their monthly volume to over 125,000 bottles per month.
They launched at Vape Summit in 2014 and were able to reach 10,000 bottles volume within two weeks. They shook hands with everyone and made friends with some powerful people. The majority of liquid companies never break through the 10,000 bottles per month barrier.
“The hardest part was getting from 60,000 monthly units to over 100,00,” DeNuccio confessed, and shared that this challenge has been echoed by others as well.
DeNuccio says they crossed the Tipping Point at the ECC (Electronic Cigarette Convention) show in Southern California in August, 2015. Their booth had lots of traffic and many said that the Propaganda flavors were so good it kept them off tobacco. Loyalty like that is encouraging and powerful.
Everyone wants to know the secret and there may not be any. Good flavors, hard work, networking with everyone you can. And a bit of luck, too.
We’ll be watching to see if they maintain their position.
IT CAN BE SUMMED UP IN ONE WORD: COMMUNITY
At the other end of the Tipping Point spectrum is the story of those that long ago crossed that threshold and can breathe a sigh of relief. Or can they?
Austin Hopper in just a few years has positioned himself as a leader in the e-liquid world. A former smoker who “laughed when I was asked to work for a company called Space Jam,” took that job and led them to become a market leader.
“The pressure never lets up,” he said. “You can never relax and never get comfortable.”
Hopper started with Space Jam in September, 2013 and “back then a 5,000 bottle order was huge,” he said. “Today you see orders many times that size. I’ve picked up checks of almost a quarter million dollars for just one shipment.”
The times and the volumes have indeed, changed.
One of negative changes Hopper mentioned is what he calls “hype products.” They can be here for just a few months at a time, but never get any traction and never create any longevity. They also never reach that Tipping Point.
When the struggle to the top eventually takes you over the top, something “shifts.” In a few words Hopper shared what happens when you take the easier ride back down.
“When customers start seeking you out instead of you chasing them, it’s a great feeling. When they are glad to take your call, it makes the struggle all worthwhile,” he offered.
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A good word that captures that place is “community.” When people want to be part of your community and culture, that’s when things change. When they continue to talk about you, you’ve made it. For now.
Another company that crossed over the crest is Cosmic Fog Vapors, the next company that Hopper worked for.
“It seems we worked our asses off for thirty days and then suddenly-BAM!- we crossed over and people wanted to carry us. I believe that Cosmic has some of the best branding out there,” he said.
Current Cosmic Fog CEO, Rob Crossley, continued: “This industry is way too fickle and there is always someone looking to take your place, which is exactly how we got here.”
He was referring to his position as one of the top selling e-liquids that some estimate sells more than Space Jam, Cuttwood and other lofty names.
When Crossley reached the 100,000 monthly volume they had a celebration to remember the moment. “We started out in partnership with a larger e-liquid player and in just a short time we surpassed their volume and ventured out on our own,” Crossley confided.
Hopper concluded with a few observations based on experience. “When people get your logo as a tattoo, that means you touched them and they will tell everyone. They will share your posts and tweets and that will carry you a long, long way.”
With regulation you will see most brick and mortar and eliquid companies closing. Those that got in for the “fast buck” can take their full or empty wallets and move on to something else. Only the strong (and smart) will survive. The ones that remain must strive to be market leaders and cross over their own Tipping Points.
Norm Bour is the founder of VapeMentors and creator of the VAPE U online programs. They offer services & resources for anyone in the vape space, including vape shops, online stores and e-liquid brands. He’s also the host of Vape Radio, the largest vaping radio show in the world with more than 1.3 M downloads. Norm interviews the masters of vape and thought leaders in the vape space. Contact him at norm@VapeMentors.com.