First things first. Is it Jan, as in January, or Yan?
"It's Yan," says Jan Louw.
I'd guessed as much. I don't speak Afrikaans, but I know it well enough to hear its sound, and Louw sounded Dutch to me. "That's right," he says. "It's more Dutch and Eastern European. I think Jan is quite a common Czech and Polish name."
That settled, we got down to business, and there's plenty of it. This is our Diwali issue, so there should be a note of celebration. But the backdrop for anyone selling vapes and nicotine pouches is anything but festive. The new e-liquid duty landed on 1 October. The government's consultation on vapes closed the day after. And the Tobacco and Vapes legislation is coming up fast behind both.
Taken together, these measures look hostile to exactly the products that have helped millions of people stop smoking. That creates a paradox the industry keeps raising and Westminster keeps sidestepping: make the less harmful option harder to buy and more expensive, and you may push people back to the more harmful one.
Confessions of an Olympic smoker
Before I could ask my first question, Jan turned the tables. Did I use any products myself?
I had to own up. For about 30 years I was an Olympic-standard smoker. I liked Montecristos, I had several pipes, and I was a devoted roll-up man, a Douwe Egberts loyalist. I loved it. Then my son reached the age of eight or nine, when children start to understand what death means, and he cried his eyes out begging me to stop.
I had a cupboard full of 50-gramme bags of rolling tobacco that I'd brought back from Europe, or had friends bring back. So we did a deal: I'd smoke my way through the stockpile, and when the cupboard was empty, that was it. That was ten or eleven years ago. I never switched to vaping because vapes weren't really around then, and I've no habit left to feed.
Jan was a smoker too, though he claims no medals. "I wasn't Olympic standard by any means. I was actually pretty poor at it," he says. "I was one of those who, after a night out, couldn't get close to a cigarette at all. And I stopped when my children started recognising the brands that I was selling."
It's a telling detail from a man whose business now looks very different. Globally, around a fifth of BAT's sales come from smokeless products. In the UK, Jan says, it's far higher: "Revenues are close to 70 per cent from the smokeless categories."
I had no idea it was that much. Cigarettes really have dropped off a cliff.
"The market has transformed substantially over the last ten years," he says. "Cigarette and tobacco volumes are declining, vaping is increasing and is a far more mature market now, and it's moved into modern oral, like nicotine pouches. There's massive growth in that area."
£10 today, £14 tomorrow?
So what happens on 1 October? The UKVIA and campaigners such as We Vape have warned that vape liquid prices will at least double, and that this will send people back to smoking. Does Jan agree?
"Look, I have got my concerns," he says. "We want to make sure that adult consumers can switch into different propositions. If you make it too expensive, all you're doing is driving these consumers back into tobacco, and you could drive them into illicit, because illicit is quite cheap on the market at the moment."
For Jan, it comes down to the out-of-pocket expense. "When a consumer suddenly has to pay another £2, £3, £4 or £5 on top, they feel it more than a gradual increase. If they were paying £10 and now suddenly they've got to pay £14, it becomes attractive not to use the same product."
It also becomes attractive to go back to smoking, he adds, "because the gap between the offer and traditional combustibles is not wide enough."
That gap is being narrowed from the other side too, by the widespread perception that vapes are as harmful as cigarettes. Jan blames soundbite media. He recalls a headline about a supposed death from vaping, "and I believe there's no recorded death from vaping at all. But that sort of item just drives a narrative that it is harmful, when it's actually not."
At this point Andrew from BAT's team, weighed in on the anti-smoking lobbyists. "They will criticise our industry and our products, but at the same time they say smokers should switch to smokeless products, and they would never engage with us. A lot of the time we have a very similar argument to them, and we have a common enemy in the illicit market. But we're viewed as a villain." He pointed to a Guardian article from the summer on research from the anti-smoking organisation ASH, which found that most UK smokers wrongly believe vaping is as harmful as smoking.
My own theory is simpler. They just don't like nicotine. It represents forbidden pleasure. Nicotine's the villain, so even pouches are evil.
Heartbeat of the community
That hostility matters because of who ends up paying for it. Jan says tobacco and nicotine account for between 20 per cent and 30 per cent of an independent retailer's turnover, "and that's without the basket spend and the footfall it drives."
The lifeblood, you might say. "It is massive," he agrees.
He had just come back from a Snappy Shopper seminar in Scotland with 250 of the delivery platform's independent retailers, and the mood was anxious. "They're trying to refit their stores, but they don't know what they must do with the counter space because of this consultation."
Will everything go in a gantry to the side, or under the counter?
"Is it drawers? Where will they put their product? Do they need a specific little room that people have to go into?"
A sort of vaping cave, then? Actually, they do exist already.
"Yes. And how much should they invest in their new store layouts?"
I know retailers who have spent serious money turning their vape section into an inviting, technicolour sales space, and they may now have to tear it all out. And if people are priced out of vaping, they won't switch to even more expensive cigarettes. They'll go to the illicit market. It's a no-brainer.
So how important is convenience to a company that also has big supermarket accounts?
"Convenience, especially independent convenience, is the heartbeat of communities across the country," says Jan. "They provide essential services which no one else does, so they're also the commercial heartbeat of our business."
A wholesaler, he explains, is transactional: you go in, get your products and come out. "But when it comes to independent convenience, you deal directly with the owner of the business and with the staff, and they've got a direct link to the local community around them." BAT's territory managers call on them regularly with advice on layout, merchandising, planograms and category knowledge.
Trust across the counter
I asked about the retailer's role in getting smokers to switch, from cigarettes to Vuse, blu or Velo, say.
"I would want them to switch to Vuse, if I may," says Jan, "from a selfish point of view!"
Fair enough. But his real point is about trust. "The retailers are generational. They hand the shop over to their family, so they also know the families who live in those areas. They become the trusted communication tool. When an adult consumer wants to switch from tobacco, that decision starts with a conversation in that convenience store with that retailer." The retailer advises on the device, the nicotine strength and, if it's a pouch, the format. "That education point happens there, and nowhere else."
This is why I'd been so alarmed a while back by an email from the managing director of a vape company whose idea was to lobby the government to allow flavoured vapes to be sold only in specialist vape shops. I thought that would kill independent retailers, who would be left with tobacco flavours while everybody wants the fruit ones. I could see why a company might want that, but it would throw our retailers under the bus.
So is a flavour ban a real danger? Jan sets out where BAT stands. "We don't support draconian measures like covering gantries, flavour bans, and covering up the product in plain packaging." Instead, BAT supports protecting under-18s: no dessert-style flavour names, no colourful or child-appealing packaging, no devices that look like toys.
He's clear, though, that flavours are "a conduit to get tobacco smokers to move from cigarettes onto vaping, and basically to stop smoking at some point. If you take flavours out, you're making it so much harder for the smoker to make a step change." Vuse, he adds, is already designed as an adult product: "Its flavours are not bubble-gum and trifle."
As for specialists versus independents, he thinks the big difference is dwell time. A vape shop gives you time to talk. But for the average smoker thinking of switching, "it's daunting and intimidating to take that step into a specialist vape store. Whereas when you go into your independent retailer, you trust the person behind the counter."
That reminded me of an old comedy sketch. A man goes into a hi-fi shop wanting a record player, and the assistant mockingly buries him in technical questions until he gives up and says, "Just a record player, please". Your average 50-year-old smoker walks into a vape store full of tattoos, flat caps and sculpted beards and feels out of place. The corner shop, by contrast, is home.
Jan laughs. "I've got friends my age who played rugby with me, and they smoke, and they ask me. I'm like, 'Why are you asking me?' And they say, 'Because you're the expert.' They don't know which device, what strength, what format."
Making noise
Asian Trader had repeatedly urged retailers to respond to the government consultation. But I still had a nagging worry. During the last consultation on the Tobacco and Vapes Bill, I heard on good authority that the wording had basically been set in stone before the consultation even began. Is history repeating itself?
Jan is understandably cautious. "I can't comment on that at this stage. They're still debating it." But he's hopeful. "There's quite a big awareness around this topic, and it features quite highly in the consultations. If there's a lot of, if I can call it, noise surrounding it, I believe the government will have to take note."
The practical problems alone should give ministers pause. He recently spoke to a retailer in south-east London about exactly this. "As a consumer, you want to walk in and spot your product, your flavour and your brand quite quickly. If it's covered up in plain packaging, you can't. Then the poor person working in the store has to find it, which takes more time. The owner has to spend a lot of money to cover it up and redo the layout."
The government's cost estimate is, he thinks, "a little bit wrong. From our estimation, and I think the industry's, it's closer to £420 to £450 million that retailers would lose if this goes through as planned."
What about licensing, which many in the trade see as a better alternative: a licence to sell tobacco and vapes, as there is for alcohol?
"At BAT, we support licensing," says Jan. "I think it's the right step, and it should have been done before any other draconian type of legislation." But it has to be enforced. That means funding for Border Force and Trading Standards, heavy fines rather than £100 slaps on the wrist, and "a two-strikes-and-you're-out type of rule. There are more disciplined retailers out there than rogue traders."
It's a bit like gun laws, I offered: Ban guns and only the criminals have them. Introduce licences and only the law-abiding will hold them.
Half the market
Which brings us to the illicit trade, and a sobering figure. "Illicit, from the latest figure on tobacco, is close to 50 per cent," says Jan.
That's a tipping point.
"If you speak to any retailer, it's a threat to their livelihood. When I do store visits, a lot of them ask me, 'What are we doing about the shop down the road that's selling illicit?'" He believes one in three vapes is now illicit, and more pouches are being seized "where we don't know what the ingredients are."
Can it even be tackled? We're dealing with what looks increasingly like a mafia. Trading Standards officers have been followed, their number plates noted and their families threatened, and they can't arrest anyone without the police.
"They need the Crown Prosecution Service to help them, and more funding to get more people out there," Jan says. BAT analyses seized products at its R&D facility in Southampton and passes intelligence on illicit hotspots to Trading Standards. He also points to a precedent from around 2009 to 2011, when HMRC calculated how much it was losing to illicit trade and clawed some of it back by investing in Border Force. "They should see it as an investment in getting the revenues back into their own pockets."
It's the same logic as tax, I suggest: raise it too far and you collect less.
"I could hardly comment," he says with a grin. "If I had to talk about taxes, and my taxes, that would be a whole conversation. All I see is taxes going out and nothing coming back in for me!"
Pods and pouches
Pouches, a recent sales phenomenon, are still booming. "[The pouch market] grew about 40 per cent from Q1 last year to Q1 this year," he says. It's still the smaller part of the nicotine market, but it's discreet, easy and convenient, so "nicotine pouches are definitely where growth is exceeding expectations."
And has the disposables ban changed how people vape? Not as much as intended, Jan thinks. "I don't think consumers have totally adopted the notion that you buy a kit and then keep buying pods." He cites figures showing kits outselling pods, 1.3 million to 1.1 million, “So, they're still treating it very much as a disposable." Big-puff devices are also bad for the corner shop, because customers visit less often. "Whereas if they purchase Vuse or a nicotine pouch, you've got a higher frequency of visits and a bigger basket spend."
The ‘golden quarter’
That brings us, appropriately for this issue, to Diwali and the golden quarter, the period leading up to Christmas that is a boon for sales and can even be a business life-saver.
Jan's advice is to be in stock, "and by well stocked up we're talking 24/7." Timing matters more than most retailers realise. "If there's an event taking place, the consumer has already decided what they're going to buy three or four days beforehand. If there's a football match on Saturday, there's no use being in stock on the Friday, because many of them will have stocked up on the Wednesday." The same goes for Diwali. "They're well aware Diwali is coming, so make sure you've got your products."
The confectioners understand this well. They put Christmas chocolates out in September because people buy them, eat them and come back for more, knowing they'd never last until Christmas anyway.
BAT's plan is to step up visits to independents, work through a calendar of events from Diwali to Bonfire Night, make sure the full Vuse and Velo ranges are on shelf, and brief retailers on the fast-selling lines and the best alternatives when something runs out. There's a warning too. With footfall up, retailers need to be vigilant on Challenge 25 and buy only from reputable suppliers, "so you don't fall into the trap of buying illicit by mistake from someone who stops and offers you a very, very good deal off the back of a van."
A fine wine and a lager
For my last question, I asked about snus, the pasteurised, unburnt oral tobacco that's legal in Sweden and banned across the rest of the EU. We Vape is passionate about it as the very best smoking destroyer, and the aristocrat of pouches, saying that if snus is a fine wine, a nicotine pouch is a lager.
Jan knows it well. "That's where pouches started." It comes in tea bag-style portions or loose, "where they pack the tobacco into a device, compact it into shape and then use it like a nicotine pouch. It's far stronger."
It turns out he once launched it himself, in South Africa, many years ago. It flopped. "The consumer there was still very much about combustibles. You could show your brand, and the brand was almost like an extension of who you are. So to bring in snus and explain to a consumer, 'Listen, you put this under your lip'…"
Where's the fun in that?
"The ritual wasn't there," he says, "so it wasn't successful."
Jan has his own local example of a smoke-free future. He lives in Teddington, and the smoking rate in Richmond is now, he believes, the lowest in the country, at under five per cent: you hardly see anyone smoking.
It’s beautiful and very leafy. If only the regulations could be so green. Before we finished, Andrew invited me to a BAT-sponsored event in Parliament on 17 November, "The £12 Billion Problem", on tackling illicit trade across industries from tobacco to fireworks. And Jan said he’s see me at the Asian Trader Awards.
Looking forward to it. Happy Diwali, Jan.