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Vaping changed Alex Pham’s life. A heavy smoker for many years, he tried his first electronic cigarette in early 2012. “Now I can go running,” he said. In April, he went the extra mile and opened H2O Vapors, a “vape” shop in Westminster to help other smokers kick the habit, too.
Vaping – a mashup of the words “vapor” and “smoking” – is the term used to describe smoking e-cigarettes, which involves using a battery to heat up a liquid, also known as “juice,” into an inhalable (and often flavored) vapor. “It’s a way to promote a healthier lifestyle,” Pham said. “My business grows every month.” The former dental technician is part of a recent flood of Orange County small-business owners opening shops and lounges that stock e-cigarettes and accessories from independent and overseas manufacturers – not to be confused with gas stations and drugstores, where people buy e-cig products over the counter. E-cigs, also known as vaporizers, come in a variety of sizes and forms.
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Sellers tout them as a healthier, more convenient alternative to cigarettes – no smoke, no ash, no tar – and superior to nicotine patches and gum because they provide smokers a similar delivery experience. The liquid contains variable amounts of nicotine, so some use vaping as a smoking cessation method. The trend has caught fire in the past few years, prompting investment from new retailers and big tobacco, as well as increased scrutiny from lawmakers and the U.S. Food and Drug Administration, which is considering steps to extend regulatory power over e-cigarettes. Booming market In summer 2012, Orange County had maybe two dozen vape shops, but that number has shot past 200, with multiple locations within walking distance in some areas. Garden Grove, for example, has seven shops within a five-block radius near the 22 Freeway and Brookhurst Street. “There are openings literally every weekend.
They’re like Starbucks,” said Bryan Gateb, co-founder of CaliVapers, a Southern California-based social network for vaping fans whose membership has grown to 4,300 in less than a year. The market is booming because demand for smoking alternatives is high, retail overhead is low and profit margins are great. Celebrity endorsements and crossover appeal among import car aficionados also help fuel vaping’s popularity.
Some industry experts, however, say the market is overheated. Norm Bour, founder of industry consultancy VapeMentorS, predicts half of the new crop of vape shops will close within the next 24 months because of inexperienced owners and tough competition. “There’s a movement toward smoking cessation, and shops are very profitable and extremely hip and cool,” he said. “But there are minefields like overexpansion and people getting caught up in the emotionality of wanting to be an entrepreneur. Many I’ve talked to have no business plan.” Others see more opportunity outside of Southern California. “A lot of people have started shops near me, and I’ve tried to go where there aren’t any,” said Jason Shaeffer, a former smoker who opened what he says was Orange County’s first vape shop, Laguna Beach-based E-Cig City, in February 2011. He operates 10 locations in the region and has six more in development in Northern California, Phoenix, Texas and Hawaii.
While Pham is later to the game with H2O Vapors, he still has established a customer base with a focus on educating newcomers to his Westminster shop. When a group of college kids wanders in on a weekday afternoon, one of the first questions he asks is how close they are to quitting traditional cigarettes. Critical mass H2O Vapors is trendier than a traditional smoke shop. An expansive black couch takes up one corner, where vapers can relax and mingle. The walls are painted with Asian-theme pop art.
Display cases are filled with e-cig models. Custom accessories like detachable mustaches, bunny tips and vinyl decals are laid out like jewelry behind glass. On the wall, racks of small bottles contain different juice flavors like “Sunday Funday” and lychee. “I’m not worried about the competition,” Pham said.
“Some shops are about making the quick sale, and people can spot that when they walk in the door.” Wells Fargo analyst Bonnie Herzog noted in an industry report that within the next decade, the consumption of e-cigs should surpass consumption of tobacco cigarettes, a U.S. Market worth $80 billion. This year, the report said, the e-cigarette market is projected to be worth $1.7 billion, roughly triple what it was last year. Celebrity entrepreneurs such as Sean Parker of Napster and Facebook fame have invested millions in disposable e-cigarette company NJOY. “It’s the perfect alternative to smoking,” said E-Cig City’s Shaeffer. “There are lots of accessories, and some people get into the ‘hobby’ of e-cigarettes, if you will, but the main thing is to get people to stop smoking.” Lately, big tobacco is moving in.
One of the “Big 3,” Lorillard – makers of Newport and Maverick brands, among others – acquired rechargeable e-cigarette company Blu last year for $135 million. Altria, makers of Marlboro, launched its MarkTen e-cig offering this summer. “It’s the first time technology has been brought to the tobacco industry in 400 years,” said John Wiesehan, CEO of Charlotte, N.C.-based Ballantyne, the distributor of Mistic brand e-cigarettes and other vapor products, which are available at about 40,000 retail locations, including Walmart. The 20-person company launched in 2012, and Wiesehan estimates Mistic will have as many as 2 million users by year’s end. “Things are going crazy,” agreed Puneet Nanda, the CEO of Rejuve E-Cigs, a manufacturer of juice flavors and e-cigarettes in Brea. Business has grown by triple digits each month since the company’s website launched in May, and the company supplies product to more than 100 shops in Southern California. Hazy future Federal and city regulations could pose a challenge to local vape shops.
This month the FDA is scheduled to review proposals to regulate e-cigs the same way it does tobacco products. That could mean quality control in ingredients, restrictions on advertising, and a stricter approach to the sale and use of the product to minors. Although vape shops face fines for allowing minors in the door, a survey by the U.S. Centers for Disease Control and Prevention showed that 10 percent of high school students said they used an e-cig in 2012 – more than double from 2011. Other surveys have shown that the vast majority who reported e-cig use were already smokers.
FDA spokesperson Jenny Haliski said the agency is concerned about e-cigs for several reasons. “Electronic cigarettes are battery-operated products that turn nicotine, which is highly addictive, and other chemicals into a vapor that is inhaled by the user,” she said. “Further research is needed to assess the potential public health benefits and risks of electronic cigarettes and other novel tobacco products.” Currently, the FDA can ban only e-cigs that make therapeutic or pharmaceutical claims. Drexel University’s School of Public Health, however, recently released findings that chemicals in e-cigarettes pose no real health concern for users or bystanders and are as low-risk as other smoke-free and nicotine products on the market. “Even if the FDA doesn’t know a juice pen from a hookah, I think the industry is due for a big correction, and the speed by which vape shops have grown is the speed by which you will see things coming down,” said Rejuve’s Nanda, who advocates for regulation within the vaping community. He manufactures products in Orange County, but notes that not all factories, particularly overseas, are up to ideal standards.
Wiesehan also favors regulations. “Vape stores are open businesses. They can mix and match flavors, and flavors can be the gateway for addiction in children. We are only going after the current adult smoker,” he said. Locally, Seal Beach placed a moratorium on new smoke and vape shops until August, while the city develops regulations for such stores and awaits FDA findings.
“It’s very new, and it’s blowing up. The key is education,” said Jan Halili, the other CaliVapers co-founder. He said lawmakers who treat e-cigs like marijuana pens and gateways to smoking are misinformed and that this could lead to a ban on a beneficial product. “The vaping culture will be very different one year from now,” he said. “This will eventually be a very regulated industry, and many shops and juice vendors simply won’t survive. But we’re not against proper legislation. We go with established brands and people who are doing it right.” Pham at H2O Vapors said regulation would be welcome if it involves making sure manufacturers are clean.
He says he’s extra careful about buying from California-based vendors. “But I don’t think they should be shutting us down,” he said. “We help people who’ve been smoking for 20, 30 years.” Contact the writer. Join the Conversation We invite you to use our commenting platform to engage in insightful conversations about issues in our community.
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