Look at e-cigarettes from a different angle, and you might be surprised to see the positive side of the vaping industry. The economic impact of vaping is often overlooked, but the fact remains that the industry plays an important role in the U.S. economy.
E-Cigarette Market in the U.S.
Research shows that the e-cigarette market in the U.S. reached $8.27 billion in 20231Trenda, E. (2024) E-cigarette market share by brand U.S. 2023, Statista. Available at: https://www.statista.com/statistics/1097004/e-cigarette-market-share-us-by-brand/#:~:text=E%2Dcigarette%20market%20in%20the%20U.S.&text=As%20consumers%20switched%20to%20smokeless,2023%20in%20the%20United%20States.
. Although this is by no means the most lucrative industry in the U.S., statistics highlight the impressive growth it has undergone in recent years.
The Federal Trade Commission found that e-cigarette product sales amounted to $304.2 million2(2022) Federal Trade Commission E-cigarette report for 2015-2018. Available at: https://www.ftc.gov/system/files/ftc_gov/pdf/E-Cigarette-Report-2015-2018.pdf in 2015. Three years later in 2018, e-cigarette sales reached $2.046 billion. Compared to other countries, the U.S. is a leading revenue generator in the e-cigarette market.
In this research, the Federal Trade Commission focused on one of the most controversial e-cigarette brands to date. According to the commission, JUUL had $260 million in sales in 2015, which accounted for 85.5% of total e-cigarette sales that year. In 2018, JUUL’s sales jumped to $1.969 billion, representing 96.3% of the total e-cigarette sales. These figures show just how important JUUL was in shaping the vape industry and the economy.
Are There More Vapers Than Smokers in the U.S.?
E-cigarettes are yet to surpass cigarettes. Recent research from Gallup found that 7% of U.S. adults say they have vaped in the past week.3Jones, J.M. (2024) Cigarette smoking rate in U.S. ties 80-Year low, Gallup.com. Available at: https://news.gallup.com/poll/648521/cigarette-smoking-rate-ties-year-low.aspx#:~:text=The%20percentage%20of%20vapers%20has,to%20combined%202022%2D2024%20data The percentage of adult vapers has stayed between 6% and 8% since 2019.
The same study from Gallup found that 11% of U.S. adults have smoked a cigarette in the last week, a historical low that was also recorded in 2022. At the peak in 1944, 41% of U.S. adults said they smoked cigarettes in the last week.
Cigarettes are still the nicotine vessel of choice, but e-cigarettes are steadily carving out a path in the socioeconomic landscape.
Highest Costs for Vape Businesses in the U.S.
When we talk about vape businesses in the U.S., we refer to the latter parts of the supply chain. Most of the world’s e-cigarettes are manufactured and packaged in Shenzhen, China. When the devices, e-liquids, and accessories reach the U.S., there is little else to do but market them and man the stores that sell them.
A few vape brands have set up manufacturing operations in the U.S., though this is the exception to the rule. This eliminates the need for global air travel, which has become fraught with legal complexities in the past few years.
Shenzhen: The Home of Vaping
Chinese pharmacist Hon Lik created the first e-cigarette at the turn of the century and released the first device to the Chinese public in 2004.
As the industry expanded, factories settled in Shenzhen, a city in southeastern China. Shenzhen is widely known as the home of vaping.
Now, factories in Shenzhen design and manufacture 90% of the world’s e-cigarette devices. 1,000 factories work around the clock to create well-known brands such as JUUL, Elf Bar, and Innokin.
You can read more about Shenzhen here.
Dollar Share of E-Cigarette Sales By Brand
A few household names dominated the vaping industry in 2023.
Here is the dollar share of e-cigarette sales by brand.4Trenda, E. (2024a) E-cigarette market share by brand U.S. 2023, Statista. Available at: https://www.statista.com/statistics/1097004/e-cigarette-market-share-us-by-brand/
- Vuse: 38.5%
- JUUL: 27.9%
- NJOY: 2.7%
- blu: 1.5%
- Logic: 1%
- All other brands: 28.4%
Disposable vape brands Vuse and JUUL forged a new path for the vape industry, one that demanded sleeker, more efficient single-use devices. They may well have created new jobs in the U.S., such as vape stores to meet the demand for disposables, but the vape frenzy in the U.S. primarily put pressure on the factories in Shenzhen.
Jobs Created By the Vaping Industry
There is little research on how many Americans are employed by the vape industry, and the research that does exist is contradictory.
A report by the Tobacco Vapor Electronic Cigarette Association (TVECA) sets the figure at 60,000 people5Owens, T. (2023) Vaping and the economy, Ichor Liquid. Available at: https://www.ichorliquid.co.uk/blogs/news/vaping-and-the-economy#:~:text=According%20to%20a%20report%20by,production%2C%20distribution%2C%20and%20retail, including manufacturing, production, distribution, and retail jobs, but the source needs clarification.
Another source states that 133,573 people across the U.S. work in the vape industry in some capacity6Vapor Technology Association @vaportechassoc Educate yourself on the candidates and issues. An informed voter is a powerful voter. #BeInformed #IV et al. (1970) Vaping impact – vaping impact on the economy: VTA, Vapor Technology Association. Available at: https://vaportechnology.org/vaping-impact/, though this figure is an outlier.
IBISWorld, an organization that focuses on industry research across all U.S. sectors, including the vaping industry, sets a more tentative figure. It found that 44,509 people in the U.S. were employed in the vape industry in 20237IBISWorld – industry market research, reports, and Statistics (no date a) IBISWorld Industry Reports. Available at: https://www.ibisworld.com/industry-statistics/employment/electronic-cigarette-vape-shops-united-states/#:~:text=How%20many%20people%20are%20employed,the%20US%20as%20of%202023.
Number of Vape Retail Shops in the U.S.
As of 2023, there were 9,331 vape retail shops in the U.S.8IBISWorld – industry market research, reports, and Statistics (no date) IBISWorld Industry Reports. Available at: https://www.ibisworld.com/industry-statistics/number-of-businesses/electronic-cigarette-vape-shops-united-states/, an 18.3% increase from 2022. From 2018 to 2023, the number of businesses in the e-cigarette retail space grew by an average of 18.3% per year.
These are the States with the highest number of e-cigarette retail shops in 2023:
- California: 10
- Florida: 9
- Texas: 7
Employment in Vape Industry Retail Shops
According to IBISWorld, the average e-cigarette retail shop in the U.S. has 4.1 employees9IBISWorld – industry market research, reports, and Statistics (no date a) IBISWorld Industry Reports. Available at: https://www.ibisworld.com/industry-statistics/employment/electronic-cigarette-vape-shops-united-states/#:~:text=How%20many%20people%20are%20employed,the%20US%20as%20of%202023. That’s four salaries contributing to the economic growth of the local area, supporting families, infrastructure, and the advancement of the vape industry.
Here are some statistics about employment in e-cigarette retail shops.
- The average vape retail shop employs more workers than it did five years ago
- The number of people employed in e-cigarette retail shops in the U.S. increased on average 15.3% per year over the five years between 2018 and 2023
- The revenue per employee for the average business in the vape retail space has increased in the last five years
Employment in Vape Industry Manufacturing Jobs
IBISWorld also found interesting statistics about the number of Americans employed in the manufacturing branch of the e-cigarette industry.
- There were 10,360 Americans employed in manufacturing in the e-cigarette industry in 202310IBISWorld – industry market research, reports, and Statistics (no date a) IBISWorld Industry Reports. Available at: https://www.ibisworld.com/industry-statistics/employment/e-cigarette-manufacturing-united-states/
- The number of people employed in the e-cigarette manufacturing industry in the U.S. increased 4.6% on average over the five years between 2018 and 2023
If we take these figures at face value, then almost a quarter of all Americans employed in the vape industry are employed in manufacturing jobs. This is no surprise, considering how the demand for increasingly unique e-liquid flavors and single-use devices has fueled the growth of the vape industry.
Future of the Vape Industry in the U.S.
By the end of 2024, the vape industry in the U.S. is projected to hit $8.8 billion11E-cigarettes – United States: Statista market forecast (no date) Statista. Available at: https://www.statista.com/outlook/cmo/tobacco-products/e-cigarettes/united-states#:~:text=In%202024%2C%20the%20revenue%20in,(CAGR%202024%2D2029). This is a relatively small increase from last year, but forecasts predict a continuous, steady incline in the coming years.
Research platform Statistica found that the vape market in the U.S. is expected to experience a Compound Annual Growth Rate (CAGR) of 5.83% from 2024 to 202912E-cigarettes – United States: Statista market forecast (no date a) Statista. Available at: https://www.statista.com/outlook/cmo/tobacco-products/e-cigarettes/united-states. Compound growth between 5 and 10% is good for most sectors, meaning the numbers paint a positive picture of the vape industry, at least in terms of numbers.
Final Thoughts
Many Americans are dependent on the vape industry for one reason or another, whether it be nicotine hits or job security.
There is little research into how the vape industry impacts the economy in the U.S. Understandably, much of the conversation around e-cigarettes focuses on the health implications, which forces some of the more positive aspects of vaping into the background.
Jobs in the U.S. vape industry are limited to the latter parts of the e-cigarette supply chain, namely the last stop, retail. The earlier, far more labor-intensive jobs, such as manufacturing devices and e-liquids for hundreds of vape brands, often happens outside the U.S. The U.S. only receives a fraction of the economic benefits but still has to contend with all the health problems associated with using vape products.
The e-cigarette industry in the U.S. is far from self-sufficient. The economic benefits must be weighed against the disadvantages inherent in relying on suppliers from the other side of the globe. Still, the factories in Shenzhen and the vape distributors in the U.S. are both reliant on one another, suggesting neither party holds complete power. After all, the U.S. is a leading revenue generator in the global vape market.
