Editor’s note: This article was first published in October 2013, and its market picture is from 2013: the boom in e-cigarette shop openings in Spain, franchise sizes, tobacco and e-cigarette sales figures and the five-year forecast. E-cigarettes have since been regulated in the EU and Spain, and many of those shops closed.
E-cigarette shops have grown at an unprecedented rate over the last two years, to the point where there has been a real boom in openings. Some franchises that started five years ago already have more than 200 outlets across Spain. These shops sell something people want, they make a profit and they are creating lots of jobs, although there could always be a “but”…
This kind of business is very profitable right now. It is really like a rising stock in a strong uptrend within a genuine bull market. In fact, these are the businesses that are reopening premises that had been closed for some time right in the centre of cities.
While sales of traditional tobacco have stagnated at 700 billion worldwide, e-cigarette sales have doubled in recent years to close to 3.4 billion, a figure that could double or even triple over the next five years. The electronic cigarette is one of the industries with the brightest future.
The problem we see is that when it comes to analysing this kind of business, we can only do so in the short to medium term, because the e-cigarette falls into the category of “too good to be true”, or “too good to be allowed”.
In other words, the e-cigarette threatens the direct and indirect profits of governments and powerful industries. Governments, because they lose millions in tax revenue; the tobacco industry, which sooner or later will have to acquire this technology; the pharmaceutical industry, because of its sales of patches and other stop-smoking products; and so on.
(Read: The most profitable businesses are clothing, food and technology)
We don’t know what decision a country’s government might take on this product, just as we don’t know what medical studies (bought or not) might come out tomorrow about the effects of e-cigarettes, giving leaders the green light to take measures that favour tax collection. It could be even worse for entrepreneurs if anyone were allowed to sell these cigarettes: if in future we can buy e-cigarettes at a tobacconist’s, a supermarket, a household goods store and so on, in the end there would be oversupply, making this product a rather unattractive business.
Either way, right now e-cigarette shops are going full throttle, so it may be the time to take advantage of the trend. Although there are currently no studies on the effects of e-cigarettes, we assume they would not be as harmful as traditional cigarettes, at least going by logic alone.
How do I open my own e-cigarette shop?
We are not going to name any particular franchise, as there are a great many of them, and they work in very similar ways and with similar margins. The fastest route is to buy one of these franchises, but first you should carry out a market study in the area where you plan to open.
Another option is to go independent: you can contact manufacturers that already sell in Spain and open your shop under your own brand.
And the other option, of course, is to sell online, with no need for a physical shop. These days, if you know your way around social media you can reach a wide audience. Of course, you need to offer the product at a price and quality that can compete with your rivals.
Further reading
- 29 ideas for making money from home
- 40 of the most profitable business ideas of recent years
- 6 innovative businesses for 2013
Featured image: Lindsay Fox, CC BY 2.0, via Flickr.
