Luo Yonghao Lalai Chen Guanxi platform electronic cigarette: don’t be so wild, Xiaoye just fine…..
Editor’s note: This article comes from WeChat public account “One view of finance” (ID: yishicaijing), author Zhang Ning, editor Xi Bei.
In 2004, the world’s first electronic cigarette was born in China, named as smoke. After that, it sold billions of cigarettes, but in the battle for overseas markets, due to channel locks and patents. The dispute was eventually acquired.
But the Chinese e-cigarette companies have not fallen, but with strong production capacity, the monopolist global e-cigarette market, in the high-speed expansion market, the monopoly of production capacity, the shipment volume is the key point for the new tobacco companies to compete, even In the face of the four major tobacco companies, they also have enough emboldened power, no longer like the domestic electrical appliances, electronic products and other electrical manufacturers, the foreign brands are singular.
They occupy 90% of the global e-cigarette market. The only thing missing is the overseas sales channel. Once the retail gates are opened, the domestic e-cigarette foundries will sweep the world, and this is the epitome of Chinese manufacturing.
Who controls the core discourse rights?
“August 22, 2006”, in the US Customs and Border Protection website database, records the date of import of the first electronic cigarette in the United States, printed on the plastic casing of the cigar-shaped electronic cigarette. The LOGO of the smoke.
In 2005, due to the lack of domestic consumption capacity, Han Li, the father of e-cigarettes, decided to turn the market abroad. Since then, e-cigarettes have become popular in the United States, the United Kingdom and other Western markets. In 2006, sales of cigarettes reached 1 billion yuan. By the end of 2008, a total of 300,000 cigarettes and electronic cigarettes entered the US and Western Europe and other markets with strong consumption power.
The purchasers of e-cigarettes are not traditional smokers who want to quit, but young people who do not smoke. Big smoke, smoke circle show, waterFruit taste, young people in Europe and America regard e-cigarette as a representative of trend culture and subculture. From Hollywood sexy goddess Lindsay Lohan to ordinary high school students, smoking is a fashion.
On social media such as Instagram and Snapchat, they swallowed and smothered the big smoke ring around their necks, and thought it was so cool. There are even videos to teach you how to modify to increase the amount of smoke. The smoke circle performance spreads around. In the social circle of young Americans, not smoking electronic cigarettes is regarded as “earth”, “not cool”.
The US article “Reasons for Trying E-cigarettes and Risk of Continued Use” states that 57% of young people start using e-cigarettes because they are curious and cool.
In order to cater to the needs of young people, e-cigarette manufacturers have increased the amount of smoke, introduced a variety of flavors of fruit and candy, and designed cool shapes. The age of electronic cigarettes is getting lower and lower. According to the data, in 2011, 1.5% of high school students used e-cigarettes. Three years later, one out of every five high school students in the US used e-cigarettes, while only 2,070 smokers actually quit smoking by e-cigarettes.
E-cigarettes have opened up new markets for tobacco, bringing new opportunities to the world’s four major tobacco giants facing shrinking markets. Data from the US Centers for Disease Control and Prevention show that the traditional tobacco market is shrinking due to government tobacco control and smoking bans, 2014 The annual smoking population accounted for 16.8% of the US population, down 8.8% from 1995, while global tobacco sales in 2017 fell 2% year-on-year.
After that, Philip Morris International, British American Tobacco, Imperial Tobacco, and Japan Tobacco have become the four major tobacco giants. Started to enter the electronic cigarette market through acquisition.
In 2013, Imperial Tobacco acquired $75 million in cigarettes, and subsequently acquired Blu e-cigarettes from Renault USA for $7.1 billion; in April 2015, JT acquired US e-cigarette company Logic and launched heating non-combustible products. In 2017, US Tobacco acquired the electronic cigarette brand Vuse for US$49.4 billion; in 2018, Philip Morris International acquired a 35% stake in JUUL for $12.8 billion to launch IQOS, a heating and non-burning electronic cigarette;
According to the data, there are about 35 million e-cigarette consumers worldwide in 2018, and the overall market size will reach 12 billion US dollars, and will grow at a compound growth rate of 462.4%. In the United States, for example, British American Tobacco’s Vuse (33.6%), Imperial’s Blu (23.6%), Nippon Tobacco’s Logic (14.5%), and Philip Morris International’s MarkTen (5.9%), four monopolies occupy 78% of the market. Share.
Chinese companies monopolize 90% of the global supply, the problem behind the sea
The rapid growth of the overseas e-cigarette market, but in e-cigarettesIn the industrial chain, the most benefit is not overseas e-cigarette startups, nor the four major international tobacco companies, but domestic e-cigarette OEMs. They launch their own e-cigarette brands and undertake the OEM of global e-cigarette brands. .
It is understood that there are thousands of manufacturers in the domestic e-cigarette industry, including more than 500 e-cigarette enterprises in Shenzhen, forming a complete set of industrial chains. Some people say that even in Shenzhen, as long as 3 million can start an e-cigarette brand. .
China and even Shenzhen have become global e-cigarette supply centers. Currently, 3 of the top 5 brands of e-cigarettes in the US market are produced by China E-cigarette Co., Ltd., and the top 5 of the major cigarette sales are all Chinese companies produce and export.
But unlike other OEM industries such as mobile phones and computers, Chinese e-cigarette companies have global e-cigarette technology. As long as you go to the foundry in Shenzhen, you will find ASIC, Vuse, Blu, JUUL, the top overseas e-cigarettes. They may all be produced from a factory and different production lines.
And this kind of industry supporting ability can’t be copied. From shape design to battery cell, covering every part of e-cigarette production, all parts can find related accessories in a street in Shenzhen.
Some people say that consumers mainly value the taste of e-cigarettes. Whoever masters the formula of smoke bombs and smoke oils will master the core of e-cigarettes. The four major tobacco giants have mastered tobacco formulas. Chinese companies are only low-end assembly manufacturing. .
But in fact China stands at the top of the e-cigarette industry:
First of all, real cigarette enthusiasts don’t smoke e-cigarettes at all, and they don’t like it. Therefore, new users are not loyal to tobacco companies’ tobacco formulas. Instead, they are younger and more willing to try new flavors besides tobacco and mint. To strawberries, red beans, coffee, etc.
Secondly, since most users focus on a few flavors, there are currently only a dozen flavors of e-cigarettes. The only thing that has become a perfumer is to change the proportion of the fragrance.
In the fast-growing global demand, the supply is less than the demand, the production capacity is the basis. At present, 90% of the global e-cigarette production capacity comes from China. Whoever has no OEM, no one can have sufficient supply to seize the market.
In terms of the invisible giants of e-cigarette foundries, in 2016, Avith and McWay’s operating revenues were 915 million and 716 million, respectively, up 199.89% and 146.59%, and their net profit remained at around 20%. In 2017 and 2018, the data can only be higher than it.
Mastering all the technologies and powerful parts and components to give domestic enterprises superior manufacturing capabilities, China’s e-cigarette companies expedition overseas lacks the last ring: retail channels.
The author believes that the development of e-cigarettes is precisely the epitome of China’s manufacturing industry, from the previous assembly and processing to industrial supporting synergy, to the mastery of core technologies, and ultimatelyWill dominate the brand, monopoly sales channels, this change will be completed in the next decade.
Survival and change, Who will supervise?
In the country, the gulf has come, and the capital has already smelled huge business opportunities in China, and it is very exciting.
As of now, there are about 350 million smokers in China, and China Tobacco has achieved a total tax revenue of 1,155.6 billion yuan in 2018, of which the total financial amount turned over to the country is as high as 1000.08 billion yuan, making it the real first big money maker in the Chinese business community. According to the country’s largest private enterprise, its profit in 2018 is about 60 billion yuan, but this is only 1/19 of the equivalent of Chinese tobacco.
It can be said that for the majority of smokers, tobacco consumption has a strong demand attribute. To meet consumer demand for health, the tobacco industry has been reducing the tar content of cigarettes for decades. Different from traditional tobacco, e-cigarettes are generally considered to have the characteristics of no burning and significant reduction of harmful substances, so capital is expected to share a piece of the trillion market.
According to incomplete statistics, venture capital institutions such as source capital, IDG, Tongchuang Weiye, and Zhenge Fund have entered the field of electronic cigarettes.
In May 2018, Aizhuyi IJOY won an investor’s RMB 300 million A round of financing; in June, RELX announced the completion of 38 million angel round financing, led by source capital, IDG Capital and investment; December, Electronics The smoke researcher “Zhisheng enables” to complete the 30-yuan A round of financing; MOTI Magic Flute Electronic Cigarette has received a $10 million investment in the A-round fund.
And recently, three Internet-born entrepreneurs Zhu Xiaomu, “Uncle of the same road” Cai Yuedong and Zhang Jinyuan founded the FLOW, the grapefruit YOOZ, and the Lingxi LINX respectively, which detonated the entire electronic cigarette industry. Luo Yonghao, who has always been unable to withstand loneliness and is good at chasing the wind, also entered the field with Xiaoye electronic cigarette, and invited Chen Guanxi to endorse.
At present, the biggest variable for the e-cigarette market is that the boots for supervision have not yet landed.
E-cigarettes are neither classified as medicines nor medical devices, nor are they officially classified as tobacco. China’s “Tobacco Monopoly Law” stipulates that tobacco monopoly products refer to cigarettes, cigars, tobacco, re-cured tobacco leaves, tobacco leaves, cigarette paper, filter rods, tobacco tows, tobacco-specific machinery, steam electronic cigarettes are not included, so The National Tobacco Monopoly Bureau has not issued corresponding standards and laws for e-cigarettes. Most e-cigarettes are still in the “three noes” state without product standards, quality supervision and no safety evaluation.
As mentioned in the previous article, tobacco is the state’s main control industry, and the state’s fiscal revenues occupy an important position. Subsequent supervision is imperative. Enterprises that want to share a piece of pie can be considered clearly.
The regulation of e-cigarettes may not be far off.
On January 1, 2019, the newly revised “Hangzhou Public Places Control Smoking Regulations” clearly prohibits smoking places, not only bannedIt is also prohibited to ignite tobacco products and smoke traditional cigarettes. On June 3, 2019, the mandatory national standards for “Electronic Cigarettes” have been reviewed and will be released according to the project plan or will be released during the year.
On August 29, 2019, the Tsinghua University Task Force released the Blue Book on Electronic Cigarettes, and strongly recommended the implementation of industry legislation and regulatory systems.
According to relevant information, the current legislation on e-cigarettes is in the process of being advanced. Including the Ministry of Industry and Information Technology, the National Health and Wellness Commission, the State Tobacco Monopoly Administration and the State Administration of Markets and other departments are involved, and the time of introduction is likely to be at the end of this year.
Change, just started……..