Traditional fragrance and flavor companies enter the e-cigarette market

　　If you ask what the hottest topic in the tobacco industry is today, e-cigarettes and vaporizers would be many people’s answer. At present, the number of e-cigarette users worldwide is steadily growing. To adapt to changes in the market, several multinational tobacco companies have launched their own e-cigarette brands. Reynolds American’s Vuse, Imperial Tobacco’s Blu, and Altria Group’s MarkTen have already taken an early lead. Of course, many more products are preparing to enter the market.

　　Now that the industry leaders have already changed course, it was only a matter of time before related sectors followed.

　　Major traditional cigarette flavor and fragrance companies such as Tobacco Technology Inc. (TTI) in the United States, Belgium’s TAIGA International, and the Netherlands-based GTF are now also beginning to supply e-liquid for the e-cigarette market.

　　Overall, several of the world’s major flavor and fragrance companies are optimistic about the e-cigarette market. George Smith, executive president of Tobacco Technology Inc., once projected that consumption in this market would continue to increase. Paul Uyttebroeck, executive president of TAIGA, also believes that e-cigarette consumption is expanding, although some adjustments may take place over the next few years. Anthony Greenstreet, manager at GTF, believes that e-cigarettes will gradually become more segmented in the future: one part of the market will target traditional cigarette consumers, while another part will serve younger new consumers, who are often more willing to accept non-traditional vaping products.

　　In the future, the e-cigarette market will place greater emphasis on product purity and advanced manufacturing processes, and Tobacco Technology Inc. understands this well. The company entered the flavor development business for hookah tobacco and cigars at an early stage and has 40 years of flavor and fragrance manufacturing experience. Its past experience will help it continue developing more and better flavor profiles. The company’s new facility, which was fully put into operation at the end of the first quarter of 2015, along with advanced cleanroom automated blending and filling technology, will provide fresh momentum for future growth. Smith said: “The U.S. currently lacks integrated capabilities that combine product blending and filling technology. We are building facilities in the United States and investing in infrastructure in hopes of making breakthroughs in this area. We can produce all types of e-liquid, and the output of our new facility can meet the demand of 10 large e-cigarette manufacturers. Our goal is to secure the majority of those orders.”

　　“The blending process here will be pharmaceutical-grade, and the final automated packaging system will also provide product traceability,” Smith explained. “The new packaging system is unique. Similar machines currently fill an average of 15 bottles of e-liquid per minute. We are working with International Tobacco Machinery (ITM), and with our support, a prototype machine has already been developed that can fill 150 e-cigarette units per minute. In other words, future production capacity will be 10 times what it is now, and only one staff member will be needed to monitor the entire filling process in the workshop.”

　　When asked about the difference between traditional flavor and fragrance companies and newer e-liquid suppliers, Greenstreet of GTF said that the marketing models and strategies in the two markets are completely different. Traditional flavor and fragrance companies do not directly engage in the B2C business of supplying consumers. However, traditional flavor and fragrance companies are subject to stricter regulation and have stronger credibility records, making them more trustworthy partners.

　　Facing this new situation, traditional flavor and fragrance companies remain highly confident. “TAIGA is fully prepared to embrace the continuously growing e-cigarette market,” said Uyttebroeck. “How much profit potential the e-cigarette market will ultimately bring to flavor and fragrance companies is still unclear, but we have extensive experience in this area, and our future market share should be considerable.”

　　Greenstreet said: “Our company has performed extremely well in mature markets such as Europe and the United States. In recent years, to meet demand for high-end products in those markets, we established our own R&D organization and production facilities, and they have developed very rapidly. At the same time, we have also seen growing demand in emerging markets such as Asia. We expect the company to achieve double-digit growth over the next five years. Our business capabilities have advanced significantly compared with the past, and we are now able to supply mid- to high-end e-liquid and related accessory products to customers worldwide. All of this will strengthen our future development.”