Emerging Trends in Non/Nicotine E-Cigarette Products

Dec.13.2022
Emerging Trends in Non/Nicotine E-Cigarette Products
A recent Stanford study found 24% of young people use zero-nicotine e-cigarettes, indicating a potential market for non-nicotine products.

A recent study by Stanford University found that 24% of young people have used nicotine-free electronic cigarette products. The study was based on a sample of 6,131 US residents between the ages of 13 and 40. The frequency of use of these products is shown in the table below. This suggests that many smokers have an interest in trying nicotine-free and low-nicotine electronic cigarettes as a way to quit smoking.


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In 2022, with the continued implementation of tobacco regulations, some e-cigarette manufacturers are seeing potential in nicotine-free and low-nicotine products, whether it be in response to demand or in an attempt to lead demand. In response, some retailers are integrating low-nicotine or nicotine-free smoking alternatives into their product offerings.


Zero nicotine


Recently, Endexx reviewed their fourth fiscal year's major achievements in their financial report and even released it one quarter early due to strong performance in this quarter.


Endexx's primary brand is CBD Unlimited. Since 2014, Endexx's subsidiary, CBD Unlimited, has been the main developer of hemp-derived products. Endexx sells high-end CBD oil, topicals, capsules, snacks, and beverages.


On November 30th, Endexx announced its revenue for the first fiscal quarter of 2023, revealing an annual revenue increase of over 500% compared to its best previous year. However, despite being primarily focused on developing and selling natural plant-based skincare and CBD products, the company's recent surge in revenue is mainly attributed to its acquisition of the nicotine-free e-cigarette producer HYLA.


On September 8th, 2022, Endexx announced its acquisition of Hyla US Holdco Limited, a manufacturer and distributor of nicotine-free electronic cigarette products. This acquisition brings two major benefits to Endexx. Firstly, it expands their international distribution network in 10 countries (Dubai, Saudi Arabia, UK, Czech Republic, Slovakia, Germany, France, Bahrain, Egypt, and Switzerland), giving them leverage for future sales of their menswear products. Secondly, through Hyla's previous distribution and sales of nicotine-free electronic cigarettes, Endexx is expected to see a significant increase in their overall revenue.


According to a report by Proactive, Todd Davis, the CEO of ENDEXX Corp., has stated that the acquisition of a controlling stake in Hyla US Holdco Ltd, a nicotine-free electronic cigarette manufacturer, will add 10 new countries to the company's international distribution network.


Notably, HYLA received two new purchase orders totaling over 200,000 units in their first month after joining Endexx.


Following that, on October 27, 2022, Endexx announced that it had secured three significant orders for its newly acquired non-nicotine plant-based electronic cigarette product HYLA. The product is expected to generate a total of $2.3 million in revenue for the company during the first two quarters of 2023. The orders come from distributors in the western United States, Central Asia, and Dubai, United Arab Emirates. The Dubai order has a potential for accelerated growth, having lasted for over six months.


Endexx CEO Todd Davis has announced that significant events during the fourth quarter have enabled the company to rapidly expand its coverage in the retail market for both skin care and pain relief products by establishing a presence in major retail locations. The acquisition of HYLA has further expanded their international distribution network, allowing for the significant increase in revenue through the sale and marketing of HYLA's unique non-nicotine, guarana-based electronic cigarette products. The company believes this product will meet an important demand in the market and provide an international channel for the sale of their other product lines in regions where HYLA already has a presence. Davis expressed optimism for the future of Endexx, citing the strides they have made and the signs of potential for future growth.


Low Nicotine


Last year, the FDA issued a ban on mint-flavored cigarettes and all flavored cigars, targeting manufacturers, distributors, wholesalers, importers, and retailers. However, VLN® Menthol King was fortunate enough to become the only legal combustible menthol cigarette on the American market and the only FDA-approved combustible cigarette that meets the agency's stringent nicotine reduction product standards.


According to a report by vaping360, in April 2022, 22nd Century Group introduced a low-nicotine cigarette (VLN cigarette, or VLNC) for consumer sales in the Chicago area. It has received FDA approval for market release through the PMTA and MRTP pathways. The 22nd Century Group's proprietary VLN cigarette smoke, odor, and flavor are similar to traditional cigarettes, but the nicotine content is about 95% lower than traditional cigarettes.


On October 26th, 2022, 22nd Century Group announced an expansion of their previously announced launch of their VLN low-nicotine cigarette product in Colorado. The company has now added Arizona, Utah, and New Mexico to the range of states where the product will be available.


In early November 2022, the 22nd Century Group announced its business highlights and financial performance for the third quarter of 2022. James A. Mish, CEO of the 22nd Century Group, stated that in the past few months, the company's low-nicotine tobacco and cannabis businesses have made significant commercial progress. The company's VLN® product release has expanded from a special pilot project in Chicago to now being available in five states. The company plans to expand the product's availability to up to 18 states within the next 12 months, which will enable them to enter over half of the $80 billion US tobacco market and establish a foothold in most states that have favorable MRTP (Modified Risk Tobacco Product) consumer tax provisions for their unique product. Even a 1% market share (which they believe is easily achievable based on their pilot results) would be transformative for their revenue. The FDA is also continuing to advance its interest in reforming menthol and reducing nicotine policies, and the 22nd Century Group is at the forefront of this opportunity with its unique MRTP-authorized combustible cigarettes that reduce nicotine by 95% and years of clinical research supporting the benefits of their product.


According to the report, in the next 12 months, 22nd Century Group will focus on bringing VLN® to at least 12 to 18 states, including Illinois, Colorado, Arizona, New Mexico, and Utah. Aside from Illinois and Colorado, Circle K has also authorized VLN for sale in all of their stores in New Mexico. This indicates that zero-nicotine and low-nicotine tobacco products may bring new economic growth opportunities for both traditional and new tobacco industries.


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Reference list/bibliography


Endexx Corporation's acquisition of a non-nicotine vape company has resulted in a significant increase in revenue for the first fiscal quarter.


22nd Century Group (Nasdaq: XXII) plans to increase sales of its VLN® products in Arizona, Utah, and New Mexico.



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