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Traditional Chinese Tobacco Companies Accelerate Vaping Expansion

H 秩名2018-12-29Views 654Source IQOS资讯网

As tobacco control tightens and health awareness rises, traditional cigarettes are declining. Meanwhile, vaping companies are springing up rapidly, pushing traditional tobacco firms to speed up their expansion.

The anti-smoking situation is clear, and consumer health awareness is continuously increasing, leading traditional cigarettes into a downward trend. By December 27, 2018, the stock prices of international tobacco giants Philip Morris International (PM), Altria (MO), and British American Tobacco (BTI) had dropped by 33.38%, 28.16%, and 51.16%, respectively.

Meanwhile, some smaller e-cigarette companies have sprung up like mushrooms and quickly seized market share in the tobacco industry. Traditional tobacco giants, unwilling to fall behind, are trying to break through by entering the e-cigarette business. The market expects that by 2020, e-cigarettes will account for 10% of tobacco market sales and 15% of tobacco market profits. With traditional tobacco companies entering the e-cigarette market, many institutions anticipate that tobacco companies will find bottoming opportunities.

From an industry perspective, Tianfeng Securities stated that new tobacco alternatives may provide opportunities for growth in traditional tobacco companies' performance. The institution noted that traditional tobacco giants are strengthening their positions in the new tobacco market through mergers and acquisitions, and multi-faceted cross-industry layouts will enhance industry concentration. Additionally, American wealth financial advisory firms cited a Bank of America research report indicating that from 2005 to 2016, U.S. cigarette sales fell by 25%, while overall industry profits grew by 70%. Tobacco companies are addressing the decline in cigarette consumption revenue by raising prices.

However, analysts point out that e-cigarette companies will still face regulatory issues, as the legality of e-cigarettes is inconsistent across the United States. Therefore, despite being popular among young people and capital, they will still face legal compliance challenges in the future.