By Norm Bour
It’s where the money is: e-liquids.
If you’re new to the industry and haven’t realized that yet, you soon will. And if you are a manufacturer, you know the profit potential. For any brick and mortar shops, this is a market that you must pursue to increase your profits.
A retail vape shop can improve revenue as much as 50 percent with its own house line. It’s also one of the easiest things to do wrong—and be put in a liability position.
According to research and statistics reported by vape directories and academics, about 60-65 percent of vape shops in the United States currently have their own lines. Using the estimated numbers of 6,000-8,000 shops, that means that 3,600-5,200 currently have their own line. And when the FDA rules are released, a large percentage of them will need to totally redo their business models.
Many house liquids are produced on-site or in a lab that does not
conform to FDA standards. Labeling, ingredients, warnings or
chains of custody are not within regulatory guidelines. Many of
the contract manufacturers that are used today will also not pass
FDA scrutiny. For the minority of shops that do not have their own
house lines, there’s an easy process to develop that model.
Contract Manufacturing Versus Do-It-Yourself
Not that long ago, there were few options to develop your own e-liquids. You typically had to create or buy your own “clean room” to whatever degree your budget, expertise and commitment would allow. In the last two years, the “contract manufacturer” industry has increased and we have a plethora of options. Well-known names like Molecule Labs, Johnson Creek, JSPR and Purilum have made it easy to develop private lines. A large percentage of inhouse manufacturers actually generate more revenue from other companies’ lines than with their own brands.
In 2013, there were an estimated 300-500 e-liquid manufacturers in the United States, and virtually all of them created products in-house. Today, the number of e-liquid companies has explode ten-fold, and just a few of them make their own products. Most contract them out. Options include creating your own “proprietary” formula or using an “off-the-shelf” formulation, which can be private or white labeled. Michael Guasch, CEO of Molecule Labs, sees a huge shakeout of the e-liquid industry and says that “as many as 80-90 percent of them may be put out of business after the FDA decision.”
Take Control of Your Market
The loyalty factor in the vape space is fleeting. Most consumers do not stay committed to any product for very long, which makes it challenging for manufacturers to command and maintain that edge. The number of consumer choices may be curtailed severely after an FDA decision.
Welcome to a New Option: Your E-liquids
VapeMentors has been working with some of the top companies in the e-liquid space and developed a turn-key, 60-day program to launch your own house brand. And, it all starts at the beginning: developing your strategy. What will make you different and distinctive? What will set your brand apart from the rest? After that is worked out, the following sample schedule would be rolled out:
Week 1: A sampling of up to 15 flavors from a nationally recognized and ISO-certified lab will be sent to your shop.
Weeks 2-3: The top flavors in desired formulations and nicotine levels will be chosen by the shop owners based on surveys and feedback from staff and customers. The names, logos and branding will be developed based on years of experience working with brick and mortar shops and e-liquid companies.
Weeks 4-5: After final flavor selections are determined, products will be ordered and pre-launch of marketing campaigns will be initiated.
Weeks 6-7: Inventory will be delivered to a shop, ready for launch.
Week 8: Launch new line.
There are certain caveats to avoid when developing a house line, and, according to David Collins, VAPE U instructor and CEO of California Vaping Company, “You should never name your liquid after the name of your shop. For internal sales purposes, it’s OK, but if you want to develop a wholesale line, you will be limited by outside shops that don’t want to sell another competitor’s line.”
For information on this new program, please send a note to sales@VapeMentors.com. The first 10 shops that participate in the new “Your E-liquid” program will have the normal setup fees waived. As the founder and president of VapeMentors, I constantly seek out new services and products to bring to the vape space. VAPE U training programs offer online courses for both brick and mortar shops as well as e-liquid companies. Our goal is to help create and grow Vapreneurs that will survive and thrive in this dynamic industry. If there is anything you need or ideas you want to launch, please contact us.
Norm Bour is the founder of VapeMentors, which offers online educational programs, services and resources for anyone in the vape space, including vape shops, online stores and e-liquid brands. He’s also host of Vape Radio, a podcast series that interviews the masters of vape and thought leaders in the vape space. Contact him at norm@VapeMentors.com.