PHILADELPHIA — RBC Capital Markets tobacco analyst Nik Modi readily admitted he’s been significantly more cautious on e-vapor than others within the industry, which isn’t to say he’s pessimistic about the category’s potential, just—in his own words—“realistic.”

“The category is going to be disruptive,” Modi said while attending the CSP Total Nicotine Conference. “It’s just not going to be disruptive in 2015.”

Modi went on to give what he described as a “state of the union” on e-vapor, outlining the current status of the category and the challenges facing vape retailers and manufacturers.

While traditional electronic cigarettes are “basically holding their ground in c-stores” (thanks largely to the national rollouts of Reynold’s Vuse and Altria’s MarkTen), Modi said “retailers are starting to de-commit from the vapor category” overall.

“Vapor is not growing,” he said. “Look at the numbers. There’s a reason cigarette sales are going up. A year ago, retailers were taking on alternative at the expense of cigarettes. That trend is being reversed.”

It’s possible that vape shops are benefitting from this waning of interest at the convenience-store level. Though the data is hard to come by (as vape shops sales are not tracked), Modi theorized vape shops are currently getting “a second wind.”

“The vape boom isn’t going away,” said Modi. “It’s just that the irrational exuberance we saw in 2013 has settled down.”

In terms convenience-store retailers and e-vapor, Modi saw no shortage of challenges: vape enthusiasts tend to be niche consumers (and very different from the traditional c-store shopper); tanks and mods are too “techie” for most consumers; and an oversaturation of SKUs (especially when it comes to flavors), not to mention the over-saturation of manufacturers in the space.

“Then there’s regulations,” Modi said. “Once the taxation stuff comes out, it could decimate that industry.”

Modi, however, said the biggest challenge to widespread success is the fact that vape technology is simply not there yet.

“If you really go to a core pack-a-day smoker, they’re just not getting the efficacy from current e-cigs,” Modi said, making the comparison of asking a die-hard coffee drinker to swap out their latte for something with half the caffeine. “There’s nothing wrong with the vape category. It just needs to evolve.”

That idea ties back to the issue of onerous regulations—assuming the U.S. Food and Drug Administration (FDA) does not move back the grandfather date when it finalizes the deeming regulations, it will become incredibly costly for the industry to evolve.

“I really do believe in the next one or two years there will be a product good enough to convert pack-a-day smokers,” said Modi. “The question is, will regulations allow it to come to market?”