Waiting for the implementation of the regulatory rules, the turnover of electronic cigarettes continued to decline (group diagram)

Waiting for the implementation of the regulatory rules, the turnover of electronic cigarettes continued to decline (group diagram)




As a substitute for cigarettes, e-cigarette has a healthy and fashionable image because it can reduce harmful ingredients, and is popular among smokers, especially young consumers. The market has maintained rapid growth for many years. However, the regulatory announcement has disrupted the pace of the electronic cigarette industry.



① Pending the implementation of regulatory rules, the trading volume of electronic cigarettes continued to decline



According to the second quarter survey data of new consumption in Blue Hole, the sales data of offline stores has been steadily declining since April, and the turnover in June only reached 50% of that in April. Among them, the sales volume of 85% of electronic cigarette stores fell in April, and 53% of stores fell by 50% in May. At present, there is no sign of a rebound in July. Most shopkeepers believe that in addition to opening too many stores, the main reason for the decline in performance is that e-cigarettes will refer to tobacco regulatory policies.



The electronic cigarette, which has been in the gray area all the year round, ushered in strong supervision this year. In March, the Ministry of Industry and Information Technology solicited opinions on the revision of the Tobacco Monopoly Law and proposed to implement new tobacco products such as electronic cigarettes with reference to the relevant provisions on cigarettes. This means that the identity of e-cigarettes as tobacco has been clarified, and there is also a question mark on whether e-cigarettes will be taxed according to the cigarette tax rate, and the profit space will be further compressed. After the release of the document, the share price of the industrial chain company fell sharply, and the leading American stock Fosmin Technology plummeted by 48%.



This is just the beginning of a bad policy. In May of this year, the National Health Commission released a report saying that there was sufficient evidence that electronic cigarettes were unsafe and had a serious impact on users. In June, the new version of the Law on the Protection of Minors clearly stipulated once again that "it is prohibited to sell electronic cigarettes to minors". Subsequently, the State Tobacco Monopoly Administration and the State Administration of Market Supervision and Administration issued "to protect minors from tobacco" and "to guard their growth". The Action Plan strictly regulates the operation of electronic cigarettes and standardizes the production and operation of electronic cigarettes.



② The global growth rate is stable, and the United States is the largest market



In recent years, e-cigarettes have become an innovative electronic consumer goods and are increasingly popular worldwide. From the perspective of the market scale development of the global electronic cigarette industry, the overall scale of the electronic cigarette industry shows a steady upward trend. In 2020, the global market sales of electronic cigarette industry will reach 42.4 billion US dollars, with a year-on-year growth of 15.6%.



Although countries have successively introduced the regulatory policy of electronic cigarette, electronic cigarette factories are still enthusiastic about the development of electronic cigarette industry. The strong growth was mainly due to the increased consumer acceptance of electronic cigarette products, the active marketing activities of tobacco companies and the accelerated innovation and product development of electronic cigarette manufacturers.



Globally, the current electronic cigarette market is highly concentrated, mainly in the United States. In 2019, the sales of electronic cigarettes in the United States reached US $16 billion, accounting for 48% of the global total sales, and becoming the world's largest consumer of electronic cigarettes. Followed by countries such as Britain, France and Germany, China accounts for 5% of the market, and the global e-cigarette culture is gradually popular.



③ The number of smokers in China ranks first in the world, and the scale of electronic cigarette market is nearly 10 billion



Yueke Electronic Cigarette Factory_ Electronic cigarette factory_ Is it easy to work in the electronic cigarette factory



China's electronic cigarette industry began in 2003. Han Li, a Chinese pharmacist, applied for the first modern electronic cigarette patent, opening the era of modern electronic cigarettes in China. The industry has experienced three stages of initial development, rapid expansion and industry reshuffle, and the scale of the industry continues to expand. At present, the state's supervision of electronic cigarettes has become clear, and the electronic cigarette industry has entered the stage of reshuffle.



In 2013, China's electronic cigarette market was 550 million yuan. In 2020, the market size will increase to 8.38 billion yuan electronic cigarette factory, with an 8-year compound annual growth rate of 72.5%. It is expected that the market size of China's electronic cigarette will rapidly expand by 2021, breaking through 10 billion yuan. The scale of Chinese smokers ranks first in the world, but the penetration rate of electronic cigarettes is only 0.6. It is estimated that the market scale still has room for improvement.



The development space of electronic cigarette has attracted many enterprises to enter the market. The data shows that the number of China's electronic cigarette enterprises has rapidly increased from 45000 in 2013 to 160000 in 2020. As of February 2021, there are more than 170000 electronic cigarette enterprises in China. In terms of growth, the number of enterprises has accelerated, with a growth rate of 30.27% in 2020. The high-speed growth will continue, and the industry track will become more crowded.



④ Avoid risks and turn to the third and fourth tier sinking markets



It is expected that Beijing, Shanghai, Guangzhou, Shenzhen and other first tier cities will become the first batch of pilots after the implementation of the electronic cigarette laws and regulations. In addition, due to the gradual saturation of e-cigarette stores in first tier cities, fierce competition and rising operating costs, some e-cigarette merchants choose to sink into the market and turn to third and fourth tier cities. This will reduce the risk of industry supervision and reduce the cost.



According to the seven pronged data, taking Guangdong Province as an example, in the first seven months of this year, in addition to the small growth of Guangzhou electronic cigarette related enterprises, the growth rate of new electronic cigarette products slowed down significantly in Shenzhen and Dongguan, while the number of new stores opened in third and fourth tier cities such as Jiangmen, Shantou, Zhanjiang, Jieyang, Chaozhou and Yangjiang far exceeded the same period last year. The downward trend of the electronic cigarette market is emerging.



Source: 2021Q1 China's electronic cigarette industry development status and market research analysis report (Ai Media Consulting), China's electronic cigarette brand list in the second quarter (Blue Hole new consumption), and in-depth report on electronic cigarette industry (Everbright Securities)

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