Smokin’ Hot

Some products come along at just the right time, when societal trends and technological advances merge to create new markets for savvy entrepreneurs. Elicko Taieb and Eitan Peer of Smoking Everywhere are betting that the American consumer’s continued interest in health and wellness, coupled with anti-smoking bans that expand almost weekly, make this a perfect time to land big sales with their company’s cutting-edge Electronic Cigarette.

Where There’s Smoke

Taieb and Peer launched their first cart last summer at Sawgrass Mills in Sunrise, FL where the company is headquartered, to test the concept. The location started drawing crowds right away. Because E-Cigs generate no offensive smell or smoke like real cigarettes and contain no tobacco or tars-perhaps the most dangerous ingredient in cigarettes-smokers view the product as a welcome option as they’re forced to navigate the public-smoking bans popping up across the country, or take steps to quit altogether.

Non-smokers welcome E-Cigarettes in restaurants, bars, airports and other places that prohibit smoking in public spaces, since the product is non-flammable and doesn’t produce foul-smelling smoke that has health implications for everyone in the area. Smokers, of course, love being able to smoke in places that ban tobacco smoke. And smokers who are ready to quit benefit from a smoking-cessation system that allows them to wean off nicotine while still enjoying the feel of handling, puffing on and exhaling smoke from a cigarette-without the hazards of tobacco.

These benefits give the E-Cigarette an automatic customer base that’s huge, says Taieb, president and CEO. After all, there are more than 44 million US adults who smoke, according to the Centers for Disease Control’s latest estimate. With such a large market to tap-many of whom are often frustrated that they can no longer smoke in many public places-Taieb and Peer predict that more than 150 Smoking Everywhere carts will open nationwide by November, the vast majority run by independent owner/operators (the rest corporate locations).

“With this product, smokers can use it almost everywhere,” because they’re not smoking tobacco, says Peer, who serves as vice president. “It doesn’t bother others.” But more than that, the product doesn’t produce the more than 4000 chemicals in traditional cigarette smoke, many of which are linked to various health problems (more than 600 chemicals are tobacco additives, but when tobacco is burned thousands more are produced).

imageBecause E-Cigarettes are not burned, they create no ashes. But each E-Cig tip has a red indicator light that turns on when users take a puff. When they exhale, there’s a vapor-like smoke that reinforces the feeling of “real” smoking-a feature that means a great deal to smokers.

And a great deal to Taieb, because the more he can get traditional smokers to turn to E-Cigarettes, the better he’ll feel. “I lost my father to cancer,” he says. “I know how devastating smoking can be. With this product, smokers can still satisfy their craving for nicotine, but they avoid the tobacco and tars-while still smoking what feels and tastes like a real cigarette. The product gives people the nicotine they are craving, but not all the bad things that go with nicotine in regular cigarettes. I think it’s going to be a big hit.”

Common Rrea Means Center Stage

Specialty retail locations are ideal settings for selling E-Cigarettes because the product is new to most consumers. To increase brand awareness in a short time without spending loads of money, they needed retail locations with maximum visibility, but they say no other option could give them the center-stage presence in the middle of shopper foot traffic that carts offer.

Plus, carts are great places to demonstrate, Peer says. Demonstration is a key to landing big sales, since consumers need to be educated about why the E-Cig is so much better than a tobacco-filled
cigarette. But he adds that the E-Cigarette is not a typical demonstration product. “This is such a new and innovative product that people come up to the carts to see what it’s all about,” he explains. “The salespeople don’t have to draw people to their carts. It’s a very easy sell.”

Once a potential buyer is introduced to the product, salespeople have four distinct ways to close the sale, depending on what kind of smoker the person is. Perhaps the biggest market segment is those who want to quit. For them, the key is to quit in a progressive way that helps increase their chance of success.

The E-Cigarette comes in high-, medium-, low- and no-nicotine strengths, (16 mg, 11 mg, 6 mg and 0 mg respectively), which smokers can cycle through to reduce their nicotine input gradually. When the users reach the last cartridge in the series, it contains no nicotine, but they can still enjoy the feel of holding and dragging on a cigarette-it just happens to be one without nicotine (or any other dangerous tobacco chemicals).

imageA second group of customers is potential customers want to continue smoking, but want to be able to do so in restaurants, airports or other public areas in cities that have enacted smoking bans. This customer segment is expected to grow significantly as the number of states and cities with smoking bans continues to increase. As of September of 2008, 37 states and the District of Columbia had at least partial smoking bans in place.

For those who want to smoke but want a “cleaner” form of the traditional cigarette, the E-Cigarette fits the bill. Because the E-Cigarette doesn’t contain tobacco, it doesn’t leave the smell of smoke on clothing or yellow stains on a smoker’s fingers. The product even comes in a number of flavors, from traditional tobacco (which tastes like an ordinary cigarette) to mint, coffee, apple, cherry, strawberry, vanilla and chocolate.

The fourth group of potential buyers are those who are value focused, looking for a chance to save money on an expensive habit. Each E-Cigarette cartridge retails for about $2 and is equal to a package of cigarettes. This makes E-Cigs vastly cheaper than traditional cigarettes at $4 to $8 a pack-sometimes more.

The secret to selling the E-Cigarette is for sales staff to determine which of these four groups a potential buyer falls into, then focus their sales pitch around that particular customer’s needs, Peer says. Because the product has significant appeal to a range of consumers-including millions of non-smokers buying the product to give to a smoker-Taieb adds that the E-Cig “will be the big hit for Christmas. Consumers who see it are ready to invest in it and change their lives. We are trying to help people in every possible way with this product.”

Start-ups Ready To Go

imageIndependent Smoking Everywhere cart owner/operators need about $6,000 to $10,000 to create an eye-catching, well-stocked display. With numerous locations already open, the average E-Cigarette cart generates sales of about $50,000 a month, Taieb says. Kashi Alon and Mati Alter, national directors of specialty retail sales, head up the specialty leasing division, negotiating leases and matching operators with the right centers. Because the product is a non-flammable, non-tobacco cigarette, malls love the concept, too. “Kashi and Mati are already working on corporate deals nationwide for 2009,” Taieb says. “We have leases in the top malls already available now, and we’re looking for retailers to fill those spaces.”

Of course, the E-Cigarette is still a relatively new concept, but when customers get a chance to see the product up close and gain a better understanding of how it works, the sales roll in, Taieb says. “Already we’re the number one seller of Electronic Cigarettes. And we’re the first company to get into the cart segment of the retail industry.”

Now that the product has been tested on carts and dozens more locations are in the works, Taieb and Peer have big plans for Smoking Everywhere. “Soon we’ll be everywhere from Las Vegas and California to Texas to New York and New Jersey,” Taieb says. “We want to be ready for Christmastime. Everyone knows someone who is a smoker-and this is the perfect Christmas gift to give to a loved one who smokes.”