Vaping in Africa

Delivered April 25th, 2019. Contributors: Olatunji O., Hillary O. and

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Vape Companies In Africa

Six vaping companies in Africa include Twisp, Valkyrie Blend, Wiener Vaper Co., Five Points, Digicig, and E-Sense. All these companies are operational in South Africa, except for Valkyrie Blend that is based in Egypt. The estimated revenue for Twisp and Digicig is $15 million and $1 million, respectively. 
MethodologyIn order to determine the revenue for the identified vaping companies, we started by exploring all company assets such as websites and social media profiles to see if these companies stated any information on their revenues or data points that we could use for a triangulation. None of these assets proved useful in this regard.

Our next strategy was to use government agencies to determine if these companies have filed or are required to file documents that detail their financial position. In examining these companies, we found that they were all private companies. According to the Companies and Intellectual Property Commission in South Africa, only "public and state-owned companies must file a copy of the latest approved Audited Financial Statements." As such, these private vaping companies are not required to provide any financial data about their operations to the public. 

Our next strategy was to consult business directories such as Owler, Hoovers, and Oxyleads, as company profiles on these directories typically include revenue estimates. This approach proved useful as we were able to identify the revenue for Twisp and Digicig. While E-Sense (Vape Culture Pty Ltd) had a profile on Hoovers, the profile does not include its estimated revenue. 

We also conducted a press search on each company, on the premise that news reports, press releases, and interviews can provide insight into how a company is doing financially. Regrettably, sources we found did not provide any tangible financial insights on any of the companies, although we did find that Brith American Tobacco South Africa has acquired Twisp.

As noted above, the most plausible reason for the lack of revenue data is the fact that these companies are private companies that are not required to release their financial data. In lieu of this, we have reported revenue for only Twisp and Digicig.

1. TwispWebsite: Link here 
Country of Operation: South Africa 
Revenue: $15 million 
2. Valkyrie BlendWebsite: Link here 
Country of Operation: Egypt 
Revenue: N/A
3. Wiener Vape Co.Website: Link here 
Country of Operation: South Africa 
Revenue: N/A
4. Five PointsWebsite: Link here 
Country of Operation: South Africa 
Revenue:
5, Digicig South AfricaWebsite: Link here 
Country of Operation: South Africa 
Revenue: $1 million 
6. E-SenseWebsite: Link here 
Country of Operation: South Africa 
Revenue: N/A

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Statistics on Smoking in Africa

Cigarette smoking is prevalent in Africa and is expected to keep gaining more traction. Currently, there are 77 million smokers in Africa, most of whom are adult men. This number is forecast to increase to 600 million by 2100. In reference to vaping, due to how expensive vaping products are, the industry is not fully mature in Africa. The number of people that vape in Africa, in general, is unknown but South Africa has about 200,000 vapers.
CIGARETTE SMOKERS IN AFRICA
According to the World Health Organization, there are 1.1 billion smokers worldwide and 77 million smokers in Africa. This means the continent has a 7% share of smokers globally. The number of smokers in most African countries is expected to increase due to the growing young population and the increasing income of middle-class citizens. A report by the American Cancer Society forewarns that by 2100, the number of smokers in Africa could increase to 600 million.

The number of smokers in Zambia alone is predicted to increase by almost 49% in the next six years. On the other hand, the number of smokers in Nigeria will supposedly double from roughly 7.36 million smokers in 2015 to 16.9 million smokers by 2025. However, in African countries with strict laws around tobacco operations such as Egypt and South Africa, the number of cigarette smokers is expected to drop. The same is forecast to happen in traditional markets.
DEMOGRAPHICS OF SMOKERS
Around 3% of young girls and 9% of young boys in Africa smoke. These figures are relatively higher than the number of young smokers in other developing continents. Most tobacco users in Africa are in low and middle-income African countries. These low and middle-income income countries account for 80% of tobacco smokers. In most African countries, more men smoke than women. About 14% of adult men in Africa smoke compared to 3% of adult female smokers in the region. In addition, smokers in this region tend to be youths. 
VAPING IN AFRICA
Due to the health hazards associated with traditional cigarettes, wealthy Africans are switching to vaping. Other smokers in the region do not have the resources to switch to vaping because of its high costs. If and when vaping products become more affordable in the region, it is expected to disrupt the cigarette industry. As one market report claims, "the usage of e-cigarettes in Africa is relatively unknown." Of note, e-cigarettes are also known as vaping devices.  Vaping has not fully gained traction in Africa. It has only gained some momentum in a few more developed countries in this region such as South Africa. Currently, there are 200,000 vapers in South Africa.  

South Africa is the leading market for vaping. The market size for e-cigarettes in South Africa is about R1 billion (roughly $69 million). The e-cigarettes industry in South Africa also supports 4,000 full time jobs. Over the past decade, the vaping market in Africa has grown by 10% each year. Recently, the Department of Health in South Africa went bullish on the use of traditional cigarettes and e-cigarettes in South Africa which implies that the e-cigarettes market in South Africa might slow down.

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Market Size - Cigarettes: Africa

Even after searching through market research reports, revenues of leading companies and news articles, we were unable to determine the market size of the African cigarettes industry. Instead, we calculated the market size for cigarettes in the Middle East and Africa. The 2018 market size for cigarettes and e-cigarettes (vaping devices) was $79.92 billion and $267.9 million respectively. 
METHODOLOGYWe commenced our research by looking for news articles published by industry-related platforms such as Market Watch and Business Insider, among others. While these websites had information on trends and statistics related to the cigarettes market in Africa, there was no mention of the sales generated in the industry.

We then examined market research reports published by platforms like PRNewswire and Mordor Intelligence, to name a few. Since there was no data provided on Africa's cigarette market, we searched for the global market size of cigarettes so we could find out what share of the market belongs to Africa. However, we came across some hurdles. First, these market research reports were obstructed by paywalls, which made it impossible to determine Africa's market share of the cigarettes industry. While they offered sypnoses of what would be included in the paid reports, none of the information provided was substantial. In addition, we found that most market reports group the Middle East and Africa together for market size data. This was the case for the market size reports we located. None of them provided a separate share for Africa alone. We also examined market reports for the market size of tobacco in Africa. Earlier, we found that cigarettes account for 93% of the tobacco market. Our plan was to apply this share to the market size of tobacco in Africa. Again, we came across the aforementioned issues that made it difficult to do this. 
 
As an attempt to provide the market size of cigarettes in Africa, we tried some triangulation strategies. At first, we tried reviewing the annual reports of key players in the cigarettes industry in order to add up the revenues of these companies. However, we soon found that these are large companies headquartered in North America or Asia. Although we reviewed their annual reports, we were only able to locate aggregate figures. Some companies had annual reports that did not segment their revenues by continent. For those that provided a breakdown of revenues by segment, the Middle East and Africa was still categorized together. Therefore, this was also a futile triangulation attempt. As a result of the obstacles we encountered, we decided to provide market size information on the Middle East and Africa.
CIGARETTES MARKET IN AFRICA
In 2018, cigarettes had a global market size of $888 billion. The market was forecast to reach $1.124 billion by 2023 at a compound annual growth rate of 4%. The Middle East and Africa have a 9% share of this market which amounts to $79.92 billion (9/100*$888bn). The increase in cigarette sales in Africa can be credited to its growing population, the increasing income of middle class citizens, and its laissez-faire and weak regulatory environment - compared to developed continents like Europe which have strict laws around tobacco production. Egypt is dominating the cigarette market in Africa as evidenced by its 2017 retail volume of 93.1 billion sticks. 
E-CIGARETTES MARKET IN AFRICA
The market size of e-cigarettes in the Middle East and Africa was $267.9 million in 2018 and was predicted to have a compound annual growth rate of 9.74% from 2018 to 2024. According to several market reports, e-cigarettes are also known as vaping devices. The key players in the African & Middle-Eastern e-cigarettes market are British American Tobacco, Joyetech Changzhou Electronics Co, and VIP Electronic Cigarettes. 

Egypt is the key market in Africa due to the country's ancient vaping tradition. The country had an e-cigarette market size of $125.8 million in 2018. A study conducted in Egypt by The Egyptian Journal of Hospital Medicine revealed that 57.5% of the participants knew about e-cigarettes. E-cigarette vendors in Egypt are constantly releasing innovative e-cigarette flavors to keep up with its demand. 
ADDITIONAL INFORMATION
More tobacco production facilities are being built in Africa due to the increase in demand for cigarettes.
A study examined 30 key markets in Africa and came across "62 cigarette production facilities" in these countries.
South Africa, Egypt, Nigeria, Algeria, and Kenya are the primary "tobacco producing hubs" in Africa.
A survey conducted in 2015 pointed out that 20% of South Africans smoke cigarettes. 
There are currently 77 million cigarette smokers in Africa.
Over the past 10 years, South Africa's vaping industry has seen a 10% growth annually. 