Vape-Shop Owners Chart New Ground

Entrepreneurs, who often are vaping enthusiasts, gain footing in New York City

By ANNE KADET, Nov. 13, 2015 

When Mohammed Esa opened a Park Slope candy and gift shop last fall, sales of sweets, treats and souvenirs were slow. “It didn’t work out,” he concedes.

So he pivoted, transforming the store into a vape shop where folks seeking a tobacco-free nicotine hit stop in for atomizers, heating coils and batteries. He replaced the vast candy selection with hundreds of vaping liquids ranging from his favorite, strawberry, to exotic varieties, such as “Feast of the Undead” and “Alien Piss.”

While the candy store failed, Brooklyn Vape looks steady. “Now we’re covering costs,” says Mr. Esa.

It’s odd there aren’t more entrepreneurs like Mr. Esa seizing the opportunity.

According to figures released last week by the New York State Department of Health, 13% of young adults and 6% of those over age 25 have taken up vaping. But in a city with more than 10,000 licensed cigarette dealers, there are fewer than 100 dedicated vape shops.

In many towns, industry experts say, there’s practically a vape shop on every corner. It’s a business, after all, with low barriers to entry: all you need is a few glass display cases and perhaps $30,000 in inventory.

But in New York City, vaping gained popularity just as the Bloomberg administration hit Peak Nanny State, going after trans fats, soda, smoking and salt. Few dared open a vape shop.

The pioneer was Spike Babaian, a former college professor and dominatrix who says she opened the city’s first vaporium in 2011. “People were afraid to invest the money and get banned,” says Ms. Babaian, who wears thick black collars with two-inch spikes, “and so were we.” But she took the risk anyhow.

The liveliest joint in Midtown these days might be VapeNY, one of three shops she owns in the city. Customers crowd into the hazy, vapor-filled store to swap news, sample flavors and leaf through Vape Magazine.

Dalton Perry, the store’s lanky young sales clerk, walked me through an introductory tasting. He asked about my current smoking habit (sporadic), and favorite brand (Marlboro Lights), before recommending a low-nicotine dose of the store’s most popular flavor, NY4—a nutty caramel variety with tobacco undertones.

“Anyone who smokes light cigarettes swears by it,” he said.

I puffed, choked and coughed on the sweet steam. It was like inhaling a warm ice cream cone. Not bad!

For a moment I considered adopting a new pastime. But vaping, with its oversize delivery devices and kiddie flavor options, feels too goofy, even for me.

Plenty feel otherwise. The city’s vape shops are packed with enthusiasts who, having quit smoking, embrace their pastime with the fervor of the newly converted.

Shopkeepers are of similar ilk. Industry consultant Norm Bour, founder of VapeMentors, says most vaporium owners are folks with zero retail experience—enthusiasts eager to share their passion.

Passion doesn’t guarantee success, but business challenges are eased by the industry’s relatively high profit margins.

While profit margins on vaping devices, which run from $30 for a starter kit to $200 for a vaporizer with digital voltage and heat settings hover around 35%, a 15-milliliter bottle of “juice” that wholesales for $2 can easily retail for $10.

Of course, local shops must compete with online stores offering rock-bottom prices. For Peter Denholtz, co-founder of Henley, a shop with locations in Gramercy and Soho, the solution is branding. His shop offers Henley-labeled T-shirts, vaping devices and liquids.

“Our brand stands for freedom, self-expression, innovation and finding your own direction,” says Mr. Denholtz, a former smoker who prefers a custard-flavored vape.

His lounge-like vaporiums, meanwhile, feature barbecues, burlesque shows, comedy nights and cloud-blowing contests.

The events are essential for attracting new customers and building the loyalty of hard-core vapers—the obsessive young men who, he says, “account for 10% of the revenue and 90% of the cred and reputation you need for a vape store.”

But now, competition is moving in. This year, California-based chain Beyond Vape opened five New York shops, bringing its total to eight. A ninth, near Barclays Center, will open soon.

Partner Chris Chuang notes that New York City is not only relatively underserved, it has among the highest cigarette taxes in the nation—an incentive to smokers looking to switch.

Beyond Vape, which offers a rewards program and bars with six-page tasting menus, focuses on neighborhoods like Williamsburg where an abundance of ethnic restaurants and bars signal “young people open to trying new things,” says Mr. Chuang.

The next hurdle? Industry experts say proposed FDA regulations could render much of the industry’s products illegal.

But shop keepers aren’t fazed. “It’s not like I opened a copy store or a liquor store,” says Mr. Denholtz. “I opened a store in an industry where the story is yet to be told. As an entrepreneur, what’s more exciting than that?”

Write to Anne Kadet at Anne.Kadet@wsj.com  - Wall Street Journal (CLICK HERE) to view the original article. 

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