E-Cigarette industry value analysis, read this article is enough

Chapter I Industry overview

E-cigarettes are electronic devices that mimic the work of traditional cigarettes. Electric current generated by rechargeable lithium batteries atomizes the soot in the atomizer and simulates the smoke produced by smoking. The combustion of e-cigarettes produces far less harmful substances than cigarettes. It is a harmless alternative to cigarettes. New tobacco products fall into the following categories: e-cigarettes, tobacco products that are heated without burning, and tobacco products that are smoke free. Among them, electronic cigarettes, heating tobacco products are the main products.

E-cigarettes are made up of an atomizer, a tube that holds a nicotine solution, and a battery. Unlike traditional tobacco, which produces hundreds of harmful substances such as tar, heavy metals and carbon monoxide when burned, e-cigarette vapor does not contain harmful substances such as tar and poses relatively little harm to smokers. Enclosed e-cigarettes are the main products in the Chinese market, among which the repurchase rate of cartridge e-cigarettes is high due to the cartridge. Such factors as the convenient replacement of cigarette oil are favored by merchants and consumers. Although there is a high percentage of smokers in China, e-cigarettes are still in the early stage of development and smokers have not formed the habit of e-cigarette consumption.

E-cigarettes can be classified in the following ways: 1. Use of cigarette oil or bomb; 2. Classification according to the type of e-cigarette power cabin; 3, according to the user suction type classification; 4. Electronic cigarettes are classified according to their appearance.
Picture e-cigarette classification

Change-type e-cigarettes have become the most dominant type of e-cigarettes in China, accounting for 74 percent of the country's e-cigarette market in 2019 due to their less harmful effects, rich taste, convenient portability and convenient oil change.

The annual cost of open and reflex-type e-cigarettes is lower than that of traditional cigarettes and other e-cigarette products. They are also more convenient to use than open versions, making them the most popular alternative to traditional cigarettes.
Picture the difference between e-cigarettes and traditional cigarettes

The upstream of e-cigarette is the raw material supplier, and the raw material takes the soot, atomizer and control chip as the core material. Lithium battery and PCB are auxiliary materials.
Vaping oil is a consumable of an e-cigarette, not a component of the device or a raw material.

Propylene glycol output is greater than the demand, part of the production capacity for export, the price is relatively stable. Edible flavor is used to determine the flavor of the tobacco oil. China's supply of propylene alcohol is in short supply, mainly imported, and the import volume is growing year by year.

From a Chinese perspective, the market share of ceramic e-cigarettes is much higher than cotton e-cigarettes: Chinese ceramic e-cigarettes are more favored by merchants and consumers, accounting for 85% of the market.

By the end of 2016, 68 countries had enacted laws and regulations regulating e-cigarettes since 2008, when the World Health Organization first focused on vaping products at the Framework Convention on Tobacco Control in South Africa. According to the World Progress Report on Tobacco Control 2016, 64% of 180 Parties have e-cigarettes in their domestic markets and 59% have policies to regulate e-cigarettes.
The World Health Organization has specifically studied e-cigarettes and has come to a clear conclusion: e-cigarettes are a public health hazard, much less a means to quit smoking, and must be more regulated to prevent harm to young people and non-smokers.
On July 13, 2020, the State Tobacco Monopoly Administration held a teleconference on the deployment of special inspection action on the e-cigarette market. The meeting required that physical e-cigarette shops should take the main responsibility, stick to the problem of irregularities in e-cigarettes, and crack down on them as soon as they appear, so as to resolutely prevent recurrence.

3.2 Industry development, driving mechanism and risk management
3.2.1 Industry development and driving factors
E-cigarettes, which were invented in China and started overseas, grew by nearly 800% in six years from ￡700m in 2010 to ￡6.1bn in 2016. The main market for e-cigarettes is overseas, and the market varies between low and high seasons, with demand surging in the first and fourth quarters when holidays are concentrated.
Meanwhile, China's e-cigarette industry has grown by leaps and bounds. By 2018, there are about 678 e-cigarette manufacturers in China, involving more than 70 supply chains, and more than 2 million domestic employees. The annual sales amount is 33.75 billion yuan, and the export amount is 28.69 billion yuan, accounting for 90% of the global share. China has the absolute right to speak in the international e-cigarette market, including the pricing right.
Since 2004, e-cigarettes have developed from the first generation to the third generation, with great improvements in quality and taste, as well as rich taste choices and personalized appearance design. From the first, the second generation of products need to manually adjust the voltage to the third generation of products can chip control power, temperature. More advanced performance, more perfect experience products continue to appear in the market.
Chart shows global e-cigarette sales

E-cigarette-forum (ECF) is the world's largest e-cigarette website. Founded in 2007, it has 250,000 registered members and brings together e-cigarette distributors in various countries. And the number of registered users continues to grow.
Restrictive factor
Countries such as Japan and the United States regulate vaping with nicotine added as a medical product, while countries such as Korea, the United Kingdom and the European Union regulate vaping as a tobacco product. China has not yet made clear the regulatory policy, and the strengthening of regulation may affect the development of the industry.

Common risks in this industry are as follows:

(1) Laws and regulations seriously lag behind the development of e-cigarettes
Due to the lack of clear policy support, the introduction of relevant industry standards is slow, which makes the current laws and regulations lag behind the development speed of the whole industry, and the industry standardization urgently needs to be strengthened.
(2) Negative media publicity brings public opinion crisis
Negative reports on e-cigarettes in domestic media mainly focus on two aspects: one is the false propaganda about "quitting smoking", the other is the question about the safety of e-cigarettes.
The misunderstanding of consumers caused by negative public opinions in China is easy to cause difficulties in the promotion and promotion of e-cigarettes. The slow reception of new things in the domestic market coupled with the one-sided reports of domestic media is more detrimental to the product publicity and market promotion.
(3) Low entry barrier and scattered enterprises
The entry threshold of the e-cigarette industry is low. At present, the number of enterprises in the e-cigarette industry is large and the scale is small. Most of the major enterprises are distributed in Shenzhen Shajing, Fuyong, Xixiang, Gongming, Longhua and other places, but about 70% of them are enterprises with less than 50 employees, which is very small. The market has not yet formed a brand with control over the industrial chain, and the market concentration is low.
(4) There is a substitution risk of heating non-burning tobacco
Compared to atomized e-cigarettes, which simulate the feeling of smoking with cigarette oil, IQOS, a heated non-combustion product, uses a bomb containing real tobacco to taste more like real smoke.
Although the heated non-combustion tobacco products developed and produced by local Chinese tobacco companies are currently banned from domestic sale and only exported overseas, whether the future policy will introduce the heated non-combustion tobacco products into the Chinese market, there will be strong competition for e-cigarettes

Top e-cigarette markets in the world