5 years in the past, Miłosz Dziurłaj’s firm consisted of 9 individuals promoting imported merchandise to Poland’s few ecigarette people who smoke. As we speak, Stylish employs greater than 1,200 — and has proved a large enough draw for British American Tobacco to need to purchase it in an try and dominate the “vaping” market.
From a manufacturing unit in rural western Poland, Stylish now controls as a lot as 70 per cent of Poland’s £100m-value of ecigarette gross sales. And BAT, which acquired the corporate final yr, is hoping to duplicate its distinctive progress because it seeks a number one place within the vaping business worldwide.
“We’re fascinated by … a market-main place, and Stylish had that,” explains Kingsley Wheaton, managing director of Subsequent Era merchandise at BAT. “[Chic] acts as an accelerator, a catalyst for our technique … It has given us a focus that we will coalesce round.”
London-based mostly BAT — which final month made a bid to purchase out the remaining of its US companion Reynolds — is greatest recognized for its Fortunate Strike and Dunhill tobacco manufacturers. Nevertheless it purchased the Polish enterprise final September to get forward within the business’s race into ecigarettes.
It now’s contemplating methods to make use of Stylish as a hub to enter different markets in Europe, Mr Wheaton says. BAT might probably use Stylish as a manufacturing centre for exports to different markets, deploying its profitable Polish manufacturers in different nations underneath the BAT umbrella, alongside its personal Vype model.
“Poland is a hub choice,” Mr Wheaton says. “We haven’t made any selections nevertheless it’s an amazing alternative — notably in manufacturing.”
In an indication of how a lot BAT values its Polish acquisition, the corporate’s international chief government, chief monetary officer and advertising head all visited Stylish final month.
“It’s a good match,” argues Mr Dziurlaj as he walks round his brilliant, chrome steel-crammed manufacturing unit during which machines are filling small bottles of smoking liquid to be shipped out to Poland’s 1.5m ecigarette people who smoke. “They will use us to get their manufacturers into Poland, they usually even have nice manufacturers right here that we will take outdoors.”
Poland is likely one of the EU’s largest markets for ecigarettes, and Stylish can produce as many as 2m bottles of ecigarette liquid per thirty days, with plans to double that capability to satisfy potential export calls for.
Gross sales are rising quickly. International revenues from ecigarettes will hit $12bn this yr, in line with Euromonitor knowledge, up from simply $2bn in 2012. However whereas that progress is sweet information for an business the place gross sales of typical cigarettes are underneath strain, the rising know-how is just not near difficult conventional merchandise. Euromonitor calculates that the traditional cigarette market is value $450bn.
Nonetheless, the strikes towards elevated regulation, elevated public information of well being dangers, rising tax prices and social shifts away from smoking imply corporations similar to BAT and its rivals have an growing curiosity in ecigarettes.
Their guess is that they might help offset the impression of falling cigarette gross sales: Typical ecigarette shoppers are people who smoke of typical cigarettes trying to scale back their tobacco consumption or to give up altogether. Most well being specialists agree that inhaling nicotine via the vapour produced by an ecigarette is much less hazardous that cigarette smoke.
Along with Stylish, which was acquired for an undisclosed sum, BAT additionally purchased UK ecigarette enterprise Ten Motives earlier this yr. In the meantime, its rival Philip Morris Worldwide is getting ready to launch a brand new ecigarette gadget within the UK subsequent yr, and London-listed Imperial Tobacco has acquired the blu ecigarette model.
However BAT’s transfer for Stylish additionally highlights the huge distinction between typical and ecigarette companies — and the challenges that tobacco corporations will face in making an attempt to handle each.
In contrast to the normal cigarette manufacturing and advertising mannequin, ecigarettes demand a give attention to innovation, extra analysis and improvement spending, and a higher emphasis on retailing — provided that ecigarettes are available numerous totally different fashions, and are bought with an enormous selection of flavours.
Stylish operates a retail community of greater than seven hundred ecigarette shops, nearly all of that are firm owned. “That’s the reason Stylish is so necessary,” says Mr Wheaton. “It’s our first massive alternative to actually get to know, perceive, check and study a retail surroundings earlier than occupied with different [retail] choices elsewhere.”
BAT is not any stranger to Poland, which is house to the corporate’s third-largest typical cigarette manufacturing unit worldwide.
The truth is, in manufacturing phrases, Poland is Europe’s second-largest producer of tobacco merchandise and the world’s seventh-largest cigarette producer. It’s a rating that displays the nation’s continued enthusiasm for smoking: Poles eat about 1,four hundred cigarettes per individual per yr — virtually twice as many as the typical Briton.