Issue link: http://read.dmtmag.com/i/550331
52 tobaccoasia TTI also has a quality control system that has been successfully audited since the late 1990s and found to be up to FDA standards. "We're also quite familiar with the FDA and we've been making disclosures for a long period of time and don't anticipate a problem with making disclosures in regards to vaping products," said Cassels-Smith. When asked how flavoring houses could differentiate themselves from e-liquid produc- ers, GTF's Grijpstra said, "Flavor houses should not be directly involved in B2C products as this is a totally different marketing and production segment. The flavor houses should be a reliable partner to the e-liquid producers in supplying well-documented and regulated flavors. "Flavors for e-liquids is a specialty," said TAIGA's Voute. "The application is different from traditional products and a lot of evaluation has to be done prior to marketing a flavor." The growing number of flavoring houses developing their own e-liquids seems to be un- daunting to e-liquid manufacturer Hangsen. "Our team is the first group of people who came into the industry since 2005, when [we] invented the first PG/VG liquid and since then we've continued to see flavoring houses come into the business," said Hangsen's Yao. Nevertheless, both traditional flavoring houses and e-liquid producers feel that there is certainly great potential for the e-cigarette and e-liquid market. "I think it's going to continue to grow," said Cassels-Smith. "I think it's also huge political fodder for every government and they will regulate it in their own ways. The trick will be to have a product that takes under consideration everybody's regulations and makes the cleanest, most well-pedigreed, consumer-friendly product available. And I think that there's a lot of success for companies that can do that." "TAIGA International is well placed for growth in this market," said Voute. "For the overall impact on our growth it is still early days; our market share should be quite consider- able in view of our expertise in this field." Grijpstra said, "The forecast for e-cigarettes/e-liquids is momentarily somewhat cloudy (caused by the different approaches of the administrations of different countries; there is too much difference in opinion on how to handle e-products). [However], we do expect a signifi- cant growth in this segment similar to the growth of shisha flavors." Yao said, "Basically Hangsen is not just an e-liquid supplier anymore, but also a leading e- cigarette and vaporizer supplier. We see them as software and hardware. But only by develop- ing products that work well together are we able to deliver unprecedented user experience to our consumers safely. Hangsen has the best chemist hardware engineers and quality control- lers in the industry who work closely to understand how each component is being developed. So we believe that through innovation and extensive market research we understand the diversity of our consumer groups from beginners, to social consumers, to vapor enthusiasts. We work tirelessly to deliver combined hardware and software to suit each individual need and that's something traditional flavoring companies cannot compete with. "Our company continues to have strong presence in mature markets like the United States and Europe. In 2013-2014, we established our R&D and production facility for high- end products based in Europe and the United States, and they are expanding very fast. Also, in addition, there's a fast-growing trend in emerging markets like Asia, so overall we're ex- pecting double-digit growth for the next five years. The Europe and United States markets are also growing, and now we're able to supply high-end and [mid-market] e-liquid and hardware to the global consumer, so it's a much wider product range than we had previously. That's also a reason that adds to the growth." Though e-cigarettes are currently more popular with consumers in the US and Europe than in Asia, it would seem that the flavoring houses and e-liquid producers are anticipating Asia to become a strong market as well. "I think that there will always be a traditional com- bustible tobacco market," said Cassels-Smith. "I think it will be augmented with people that choose to vape their source of nicotine, and I think that ultimately Asia will have the highest consumption in vaping product because they have a large population and many of them enjoy nicotine products. It will come there, it will just take time. It's a traditional tobacco market and that will also be strong there, but there will be people that choose to vape and ultimately the science will make it available." "In a lot of the markets you actually see that the technology starts from the United States and goes to Europe and then goes to the rest of the world. I think that will happen for e- cigarettes as well," said Yao. "Because this industry is so young it's not time yet, but once it takes off, the impact is going to be massive because Asia has the largest population in the world."