Vape chain VPZ lighting up in Europe ahead of potential IPO

Britain’s biggest e-cigarette retailer has revealed plans to expand its footprint into Europe before making a potential stock market debut as it capitalises on the booming vaping industry.

VPZ – recently rebranded from Vaporized – is already opening one store a week in the UK under a target of nearly trebling its 120-strong shop estate to 300 by 2021.

But director Doug Mutter told the Press Association that the Edinburgh-based group is also eyeing international markets to replicate its UK success, with aims to take on Europe in 2020.

He said the group – recently ranked among the 25 fastest-growing UK companies in the Sunday Times Virgin Atlantic Top 100 – is also setting its sights on a possible stock market flotation as soon as 2021.

It comes after more than six years of fast-paced growth for the family-run firm, which was founded in 2012 by brothers Callum and Connor Henderson.

VPZ, formerly Vaporized, is rolling out its new branding across the chain in the first quarter of 2019 (VPZ/PA)

VPZ made annual sales of £22.7 million in 2017 and is expected to see revenues jump 17% in 2018 to around £26.5 million.

Mr Mutter said that, while VPZ will be focusing on its ambitious UK growth targets this year, it is laying plans for a move into markets such as Germany, Spain, France and Scandinavia from next year.

The group, which employs more than 500 staff, is already running a project with retailers in Spain to test how well its products sell in the country.

Mr Mutter said: “Germany has a huge smoking population and an up-and-coming vaping industry – but not quite where the UK is yet.”

“We have got a tried and tested model in the UK and we know what to do here – it’s getting that understanding in these other countries,” he added.

Once VPZ has got its teeth into the European market, it plans to look at a possible initial public offering (IPO) to help fund expansion.

The founding brothers are still the only shareholders in VPZ, but Mr Mutter said the company is “geared up and looking towards” an IPO in the next two to two-and-a-half years to help it grow at a faster rate.

Until then, VPZ – which also manufactures its own vaping liquids under the Absolute E-Juice brand – is busy popping up on high streets across the UK.

It is taking advantage of empty shop space left by recent retail casualties to gain access to prime locations.

The group wants shops to be within easy reach of most towns so that ex-smokers are not tempted back to tobacco.

“It’s all about making sure there’s the availability for these people to nip into a VPZ store,” said Mr Mutter.

There are around 2,500 vape shops in the UK, but VPZ wants to offer a high street alternative to the “dark, grungy tattoo parlour” look.

Mr Mutter said: “It could be smokers in their 20s or 80s that are coming in to the shops, so it’s a fresh high street look to the business that we try to achieve.”

With Public Health England recently backing e-cigarettes as being 95% less harmful than tobacco, Britain has a very progressive approach to vaping.

But not every international market is the same and the threat of tighter regulation looms large for the industry, which is predicted to be worth more than 44 billion US dollars (£33.6 billion) globally in five years.

Hong Kong is banning vaping, while the US Food and Drug Administration recently launched a crackdown on e-cigarette use among young people.

VPZ admits more stringent regulation remains a risk, but is confident the UK Government will not act rashly.

“The UK market has gone too far for them to bring in draconian regulation measures,” said Mr Mutter.