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E-cigarette sales in recent weeks grew by the slowest rate in more than a year and a half amid public health warnings over vaping, while cigarette sales declines eased slightly in the past month, according to industry data.

Sales of e-cigarettes grew by 25.5% in the four weeks ended Oct. 5 compared with the same period a year ago, Cowen analyst Vivien Azer wrote, citing data from Nielsen. It’s a significant slowdown from the monthly growth rates of more than 50% that the e-cigarette category has seen since at least August 2018.

The slowing growth of e-cigarettes comes as U.S. regulators are expected to halt sales of flavored vaping products to address concerns they’re marketed to underage smokers, and in the wake of a lung ailment that has afflicted nearly 1,300 patients and killed 26 people, according to a report from Centers for Disease Control and Prevention last week.

“The impacts of vapor related illnesses have led to substantial sequential declines,” Cowen’s Azer wrote. Compared with the prior month, e-cigarette dollar sales were down 18.4%, while unit volumes were down 14.3%. JUUL, Cowen’s data showed, posted its third straight loss, as its market share as measured in dollars declined 64%.

In a similar trend, IRI data also showed that e-cigarette sales growth “decelerated sharply again amid rising regulatory scrutiny,” according to Bloomberg Intelligence. Retail sales grew 30% in the four weeks ending Oct. 6, significantly slowing from a 60.8% gain for the 4-week period ending Sept. 8. “A rising number of state and local bans on e-vapor products are weighing on sales,” BI analyst Ken Shea said.

On the other hand, drops in cigarette volumes were less pronounced than in the prior period, falling 6.2% in the 4-week time frame, compared with a 6.9% decline trend during the previous 12 weeks, according to Cowen. Cigarette sales have fallen for the past 23 months, Azer wrote.

It may be “too early to be certain” whether recent FDA-related news and “an increasingly negative perception of e-cigarettes” may be contributing to improved combustible cigarette volumes “as vapers potentially return” to traditional smokes, Wells Fargo analyst Bonnie Herzog said in a note.

Still, analysts are standing by the prediction that the cigarette industry will bounce back. Wells Fargo continues to expect industry volume to fall 6% this year, although “there could be upside based on the consumer response to the FDA’s actions on e-cig flavors/JUUL,“ Herzog wrote.

BI analysts said that while numbers had “improved modestly,“ cigarette sales “didn’t appear to fully capture the benefit from a pickup amid dramatically slowing sales of competing e-cigarettes.”

E-Cigarette Sales Slow Dramatically in Wake of Vaping-Related Health Warnings

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