Carreras embarks on nicotine future
Carreras Limited has launched a series of vape products under the Vuse brand, that aims to augment the company’s offering of nicotine products.
“By 2025, we want to be the leader in nicotine. We are now the leaders in tobacco, but now we want to be the total leaders of nicotine,” said Managing Director Franklin Murillo at the company’s annual general meeting in New Kingston on Thursday.
Although tobacco contains nicotine, the company makes a distinction between the two, with the latter seen as epitomising an emerging lifestyle shift in smoking trends towards vaping.
The company will continue to sell its traditional cigarettes, led by the Matterhorn and Craven-A brands, but will augment revenues with vapes.
Vape products usually resemble pens that, when inhaled, release nicotine or other substances. The vapes are powered by a battery that becomes engaged when inhaled but remains below the burning point. Users are often seen puffing clouds of vapour upon exhalation.
Carreras didn’t give revenue forecasts for the size of the vape market that it wants to capture. A key source at Carreras told the Financial Gleaner on Friday that less than two per cent of adult nicotine users currently vape. In the United States, that figure stands at about five per cent.
In 2022, Jamaica imported US$46.5 million worth of tobacco-type substances, led by cigarettes and cigars, according to United Nations trade statistics. Of that figure, substances that “contain nicotine intended for inhalation without combustion”, or vapes, totalled US$7.2 million. It implies that the non-combustible segment of the market is finding a market.
The Vuse brand is ultimately owned by British American Tobacco Plc, the parent company of Carreras. Vuse will be sold in two main size options: 500 puffs, costing $1,200, and 1,500 puffs, priced at $2,000. Each of the two sizes offers six flavours.
Carreras sells cigarettes through more than 4,000 distribution points locally. Sales at the cigarette trading company rose 33 per cent to $4.3 billion at year ending March. The new business line would act as a counterbalance to the illicit trade, which accounts for some 20 per cent of the market.
Murillo noted that some smokers only vape.
“We are looking at the transformation of the business. Now the consumers of nicotine are demanding other products such as vape, such as tobacco heating devices, where there’s no combustion but heating. We understand the trends and started the distribution of the number one vape device in the world, Vuse,” he said.
The company will analyse the market daily under its new customer management system, to determine the take-up and adjust distribution of Vuse accordingly.
“The strategy is to give the consumer the flavours that they like. In terms of distribution, it’s ensuring that there is availability for consumers on demand,” said Murillo.
Data from other markets indicate that while a segment of consumers will gravitate to vape, others will continue with cigarettes.
In its past financial year, the company experienced a dip in profit from $4 billion to $3.6 billion.
However, for the first quarter ending June, earnings grew at a robust 60 per cent pace to $1.1 billion.
“The global inflation and the cost of our goods went up, and that’s why we had a small reduction in profit in early 2023,” Murillo said.
“We have a clear ambition for 2023; it is the year to invest to prepare Carreras for the next 100 years,” he declared.