The global vaping industry continues to thrive, with companies leveraging innovative products and strategic market expansions to drive growth. Recently, PJ Carroll & Company Ltd, a subsidiary of British American Tobacco (BAT), reported a significant 23% increase in pre-tax profits for 2023, fueled by the strong performance of its e-cigarette and related product sales. This article delves into the financial highlights, market dynamics, and challenges faced by PJ Carroll, offering valuable insights for independent foreign trade sellers in the vape industry.

Company Background: PJ Carroll & Company Ltd

PJ Carroll & Company Ltd is one of BAT’s longest-running operations in Ireland, established over 190 years ago by Patrick James Carroll in Dundalk, a town in northeastern Ireland. Historically known for its tobacco products, the company has successfully pivoted to capitalize on the growing demand for vaping products, positioning itself as a key player in the modern nicotine market.

2023 Financial Highlights

1. Profit Growth

PJ Carroll’s e-cigarette sales were a major driver of its financial success in 2023. The company reported a 23% increase in pre-tax profits, reaching €6.18 million. This growth underscores the rising popularity of vaping products and the company’s ability to adapt to changing consumer preferences.

2. Net Revenue Increase

The company’s net revenue also saw a 7% increase, rising from €28.48 million in 2022 to €30.53 million in 2023. This growth reflects the strong performance of both its combustible and non-combustible product lines.

Key Drivers of Performance

1. Diverse Product Portfolio

PJ Carroll’s success in 2023 can be attributed to its robust portfolio of combustible and vapor products. The company also benefited from the launch of VELO nicotine pouches in June 2023, which marked its entry into the modern oral nicotine category.

2. Market Dynamics

The vaping market in Ireland is highly competitive, with disposable vapes driving significant demand. PJ Carroll’s vapor products accounted for 22% of its total revenue in 2023, highlighting the growing importance of e-cigarettes in its business strategy.

Market Challenges

1. Illegal Trade

One of the biggest challenges facing PJ Carroll is the illegal trade of e-cigarette products. The company’s directors noted that non-compliant products imported from Northern Ireland and the UK have created a difficult trading environment. They also highlighted the lack of enforcement against the sale of non-compliant products and underage sales.

2. Regulatory Pressures

Starting in the second half of 2025, Ireland will impose a €0.50 per milliliter excise tax on e-liquids. This tax is expected to increase prices across the board, potentially driving consumers toward illegal products or even back to combustible cigarettes. Additionally, recent government announcements regarding vaping legislation have created uncertainty, with questions surrounding potential restrictions and bans.

Product Sales Breakdown

1. Combustible Cigarettes

Despite a 13% decline in sales volume, PJ Carroll’s combustible cigarette revenue increased due to price hikes implemented in March 2023. Combustible products accounted for 75% of the company’s total revenue, which stood at €181.32 million, including €150.79 million in duties, excise taxes, and other levies.

2. VELO Nicotine Pouches

The successful launch of VELO nicotine pouches contributed 3% to the company’s total revenue. The directors praised the product’s strong market performance and brand competitiveness.

Impact of Illegal Trade

Illegal trade and non-duty-paid products (NIDP) remain significant challenges for PJ Carroll. The directors reported that illegal trade and NIDP account for 34% of the total combustible market, with illegal cigarettes making up 19% and NIDP accounting for 15%. This issue has been exacerbated by Brexit and is expected to continue growing.

Profitability and Financial Health

After deducting €973,000 in corporate taxes, PJ Carroll’s after-tax profit for 2023 stood at €5.2 million. The company’s accumulated profits reached €42.85 million by the end of the year, reflecting its strong financial position and ability to navigate market challenges.

Key Takeaways for the Vape Industry

1. Growth Potential: The success of PJ Carroll’s e-cigarette business highlights the growth potential of the vaping industry, particularly in markets with high demand for innovative nicotine products.
2. Regulatory Risks: Companies must stay ahead of regulatory changes and adapt their strategies to mitigate risks associated with taxes and restrictions.
3. Illegal Trade: Combating illegal trade requires collaboration between governments, manufacturers, and retailers to ensure a level playing field.
4. Product Diversification: A diverse product portfolio, including both combustible and non-combustible options, can help companies weather market fluctuations and capitalize on emerging trends.