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NJOY moves toward tank systems (VTMs)

NJOY, a leader in the e-cig category known as "cigalikes", is diversifying its product line with a move toward the "tank systems" that some industry analysts see as the wave of the future. Cigalikes imitate the smoking experience quite closely, in looks and with the behavioral cues that make users think they're smoking a cigarette. For that reason, they are sometimes preferred by newbies, smokers just beginning the path away from cigarettes through vapor.

More experienced users are increasingly turning toward "mods" -- vaping systems with a sleek, modern look that doesn't imitate a cigarette -- it's much cooler than that, although the "mod" refers to "modified" rather than "modern", since early on they were designed by users themselves, who customized their systems. Industry watchers like Nik Modi of RBC Capital Markets and Bonnie Herzog of Wells Fargo Securities decry robust growth in this segment of the market, and not only current growth, but growth potential. Herzog hazards a guess that NJOY may achieve a goal of "obsoleting combustible cigs" with its move in this direction, which she labels "VTM" (for "vapor-tank-mod).

Between cigalikes and tank systems lie rechargeables, which are still e-cigs and may look quite like combustibles, but differ from the "first generation" e-cig in that the batteries are rechargeable. They aren't disposable like the gen 1 e-cig. NJOY is bringing out a rechargeable line as well as a "high vapor product" -- their entry into the VTM market segment, according to President Craig Weiss and marketing honcho Geoff Vuleta. VTMs already present in convenience stores and NJOY is negotiating with major chains to expand their VTM presence there.

Says Modi, the move

makes sense from a vantage point that consumers are migrating to different subsets of the category. I would expect more companies to follow their lead.

Weiss and Vuleta claim they intend to bring "a new level of professionalism and marketing innovation to the vapor category." This will be welcome, since one complaint during the unregulated days of the vaping industry, a lot of small manufacturers with varying degrees of professional savvy produced an inconsistent and confusing array of products. Analysts like Herzog expect a "commoditization" of the VTM segment, meaning that it will sort itself out into manageable and predictable list of consistently produced products and brands.

Another benefit to this development may be the creation of tank systems that will be less worrisome to regulators. Currently, tank systems are under attack since they seem more likely to produce dangerous formaldehyde, because they are capable of heating e-liquid to higher temperatures. As the product becomes commoditized, chances are that acceptable solutions to this and other problems will be found by the research divisions of leading companies.

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