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Put that in your e-cigarette...

WHILE MOST BUSINESSES were retrenching staff, reducing costs and closing up for good last year, two men decided to pool their savings and build a company in a backyard shed. When family and friends said it couldn't be done they grew it into the multimillion rand company it is now. Together, Nick Nieuwstadt (33) and Philip Bartholomew (34) are the founders and co-owners of Twisp, a premium electronic cigarette (e-cigarette) brand.

"People have been smoking tobacco for years and nicotine makes sure people keep smoking. But it's actually the burning of tobacco that harms you," says Bartholomew. "When I was looking for a way to quit smoking I stumbled on this new technology in China that allows you to satisfy your nicotine cravings without actually smoking. It was something so obvious you just wanted to kick yourself."

While e-cigarettes may feel, look and taste like the real thing, they're actually a battery-powered device that allows users to inhale doses of nicotine by way of a vaporised solution. That vapour doesn't smell nor does it contain tar, carcinogens or smoke particulate found in first- and second-hand cigarette smoke. There's no tobacco, no combustion and no smoke.

"It's essentially a nicotine delivery device that simulates smoking," says Nieuwstadt. "And since our smoking laws are against the combustion of tobacco, e-cigarettes fall into a grey area." With no real legislation banning the use of personal vaporisers, users are able to smoke their e-cigarettes anywhere and everywhere. Since this technology hadn't been introduced to South Africa, both Nieuwstadt and Bartholomew saw a golden opportunity. In partnership with Janty, a Dutch e-cigarette manufacturer, Twisp was launched in May last year.

"Since we were the first to bring electronic cigarettes to SA we had the pick of litter when it came to different manufacturers and different suppliers," says Nieuwstadt. "It became very apparent there was some really bad stuff out there - but Janty's offered a premium product at a premium price and we wanted to offer the South African public the best device possible."

With their combined savings of R500 000, the co-owners invested in stock and a campaign to properly launch the product. "Our biggest challenge has been educating the market. We obviously started on a small budget and we needed to spread the word and find the right pockets of people," says Bartholomew.

Three months after its launch Twisp had broken even and its monthly growth rate was 300%. Twisp products are currently found countrywide, as well as in Namibia and Botswana. Its net profit is roughly 40% of turnover and the company employs 10 people, with 20 resellers, five distributors and more than 100 retailers. However, over the past two months the initial growth spurt has dropped to between 8% and 10%/month.

"We've got a lot of competition now and a lot of generic devices are available and I suppose that's diluted the market a bit. I also think we may be feeling the economic pinch," says Bartholomew.

Despite that, both men believe there's enormous room for growth. "Towards the middle of this year nine out of 10 people still hadn't heard of e-cigarettes. Now I think that figure is closer to around seven out of 10 - so there's still a large market out there," says Nieuwstadt.

But growing competition remains a major threat. "It really isn't easy," says Bartholomew, "because companies are constantly driving the prices down to the ground to increase their market share. When you're dealing with a product like this - which involves potentially toxic chemicals - you have to be very precise. You don't want to cut corners.

"Around 95% of the manufacturers in China are all making copies of the same device. Some may be made really well but others might not. Because they all look the same we have to tar them all with the same brush and I can't see many international companies able to compete with the quality of Janty's products."

While most business owners strive to make a profit, Bartholomew and Nieuw-stadt believe their business does more than that. They believe its success can be measured by the number of people who have quit smoking. "It's nice knowing you're adding years to people's lives," says Nieuwstadt.

But the health risks of using e-cigarettes are still up for debate. Twisp's co-owners claim it's a healthy alternative to smoking. "The Electronic Cigarette Association believes in the worst case scenario e-cigarettes are 99% safer than traditional cigarettes," says Bartholomew. "We've also had doctors in SA conduct informal studies by handing out about 400 of our kits - and 45% of those smokers gave up smoking entirely after two months. That success rate is far higher than any other method."

A Health New Zealand study conducted detailed analysis and concluded carcinogens and toxicants are present only below harmful levels. Overall, the product tested was deemed a "safe alternative to smoking". However, other associations don't agree.

The World Health Organisation states that to its knowledge "no rigorous, peer-reviewed studies have been conducted showing the electronic cigarette is a safe and effective nicotine replacement therapy. However, WHO doesn't discount the possibility the electronic cigarette could be useful as a smoking cessation aid".

In July this year the Food and Drug Association in the US issued a press release discouraging the use of electronic cigarettes and repeating previously stated concerns that electronic cigarettes may be marketed to young people and lack appropriate health warnings.

With the first newly opened kiosk at Cape Town's V&A Waterfront, Bartholomew and Nieuwstadt hope to grow their franchise throughout SA. "We'll have dedicated and trained staff so should anything go wrong there are qualified people to assist," says Nieuwstadt. Along with spreading the brand they'll be producing the nicotine liquid in SA. "Next year it's due to be registered with the Medical Control Council and it will be the first registered liquid in the country, if not the world," says Bartholomew. "By bringing our products in house and really pushing for regulation within SA, we're able to protect our market and keep people safe."

PHILIP BARTHOLOMEW

Who was the last person to make you nervous?

My wife.

If you had one wish what would it be?

To see the earth from space.

What was your greatest triumph building Twisp?

When "To Twisp" became a verb. Then came Twisping and Twisper.

NICK NIEUWSTADT

What really freaks you out?

Losing my family.

Who was the last person to make you nervous?

A bus driver driving towards me on the R27.

What's the biggest mistake entrepreneurs make?

They start businesses suited to their likes rather than satisfying public demands.

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