Vape Market Outlook: How Big Is the Vaping Market?

An analysis of the e-cigarette market outlook: How big is the vaping market? Professional research institutions have conducted surveys on the new tobacco e-cigarette market, and we are committed to providing readers interested in the new tobacco e-cigarette industry with insights into cutting-edge trends, product research, and behind-the-scenes stories.

Recently, three young people in the e-cigarette industry have gained some attention. Discussions about the e-cigarette boom may take a long time to settle down. Although this industry has existed for quite some time and there are companies quietly making profits, it is only now that the public is paying close attention, thanks to these three young internet entrepreneurs.

In order of age, these three young people are:

Zhu Xiaomu, the founder of Fulu FLOW, born in 1983.

Cai Yuedong, the founder of YOOZ, born in 1988.

Zhang Jinyuan, the founder of Linxi LINX, born in 1991.
However, Zhu Xiaomu, born in 1983, cannot really be considered a young internet entrepreneur; it seems that the era now belongs to those born in the 2000s. The youngest, Zhang Jinyuan, is also not as young as the product manager born in 1995 from Duoshan.

The three of them have founded e-cigarette brands that are currently not very large, with initial sales data in the hundreds of thousands of yuan. However, the miracles of the internet age are not unheard of, and this is no longer an era that can be understood with traditional thinking.

What surprises the outside world is that these three individuals have no prior experience in the tobacco industry but have entered the e-cigarette market. If they had to be labeled, they would all be young people who have worked in the internet sector.

Zhu Xiaomu was the first employee of Smartisan, belonging to the product manager category, so you can imagine that FLOW should not be lacking in product experience. One detail is that after taking 15 puffs, it vibrates to indicate that you have smoked a stick.

Cai Yuedong was the former CEO of the popular astrology account, Tongdao Dashi, and graduated from Tsinghua University’s Academy of Arts and Design, so you can expect that YOOZ's design aesthetics should be quite good; otherwise, it would tarnish the reputation of Tsinghua University.

Zhang Jinyuan is the recent CEO of Tongdao Dashi (from the A round to the acquisition round of investment), but it seems that he will soon also be a former CEO. With a head full of silver hair, he looks like a tough guy with a metallic quality, which is very similar to the metallic feel of Linxi LINX.

Two older gentlemen meet again on the same track, and life is indeed cruel. However, the e-cigarette track is wide enough, and the user base is large enough; currently, this level of competition is hardly significant.

These are entrepreneurs from the internet background, and we can easily judge their product characteristics based on their past experiences and resumes.

It was their simultaneous launch of their respective e-cigarette brands in January 2019 that made the public realize how exaggerated this industry is. Therefore, even though their companies are currently small, Blue Hole New Consumption believes that these three young people deserve praise.

Without their ignition, would you know that there are actually two major giants in the e-cigarette industry? IQOS and JUUL.
JUUL is valued at 38 billion USD, my goodness, in just three years. The average year-end bonus for employees is 1.3 million USD each; this is not just envy, this is simply the super giant of the entrepreneurial circle.

Without their ignition, would you know that Shenzhen has become the most powerful e-cigarette capital, producing 90% of the world's e-cigarettes and currently becoming the largest e-cigarette production base globally?

Without their ignition, would you know that there are actually two schools of thought in e-cigarettes? One is represented by IQOS, the heat-not-burn school, which directly heats a thin sheet made of tobacco. The other school is represented by JUUL, which belongs to the e-liquid school, producing vapor similar to that of traditional cigarettes through an e-cigarette vaporizer.

While Blue Hole New Consumption observed the launch of several products, many enthusiastic onlookers continuously shared news of e-cigarette trafficking cases across the country in WeChat groups, expressing concerns about the current e-cigarette projects.

But did you know that the products involved in the cases uncovered across the country are represented by IQOS, the heat-not-burn school, while the e-liquid school is currently not under regulatory scrutiny? Why is that?

According to the National Tobacco Monopoly Bureau's identification and inspection, the "cigarette sticks" of e-cigarettes like IQOS contain characteristic components of tobacco, and the filling is made from tobacco leaves, which belong to tobacco products. They have not changed the essential properties of tobacco, and according to the "Tobacco Monopoly Law of the People's Republic of China" and other relevant laws and regulations, such products are subject to regulation and cannot be sold without approval from the Tobacco Monopoly Bureau.
#p#分页标题#e#

Most of the reports about arrests for selling e-cigarettes are due to the trafficking of IQOS.

The e-liquid vaporizer school represented by LINX, FLOW, and YOOZ currently appears to be in a safe zone. There is a saying in the legal community that if the law does not explicitly prohibit it, it is permitted. We speculate that before their establishment, the relevant teams must have conducted in-depth investigations and studies on the above rules, ensuring they do not enter legally prohibited industries.

Actually, even before these three, there was another e-cigarette brand that was quite impressive but did not ignite the public's attention towards the e-cigarette industry.

This brand is called RELX, founded by former Uber executive Wang Ying, which completed its first round of financing of 38 million yuan led by Source Code Capital and followed by IDG Capital in June 2018.

According to the latest news obtained by Blue Hole New Consumption, RELX's valuation has reached 1 billion USD, which is astonishing. This news has not been officially confirmed.

How can this not make one's blood vessels swell? Even more exaggerated is the enormous scale of the entire industry. China has the world's largest number of smokers, about 350 million people, accounting for 44% of the global tobacco market. However, the penetration rate of e-cigarettes in China is less than 1%, while this figure in the US market reaches 13%.

Many people may ask, the cake is so big, but isn't tobacco controlled? How can a few small companies eat it?

Indeed, if a startup company were to create an IQOS-type e-cigarette, they might not even get to launch the first product before being shut down, as this falls under tobacco monopoly. However, for e-liquid e-cigarettes, there is currently no regulation, and brands like RELX, LINX, FLOW, and YOOZ have chosen to explore this direction.

To be more precise, this area belongs to a gray zone. However, if the law does not explicitly prohibit it, it is permitted. Those who wish to wear the crown must bear its weight. Back in the day, Didi Chuxing also started amidst great risks, and now it has a valuation of hundreds of billions of USD.

Many people are actually afraid of that script repeating itself; those who did not value it back then may not be able to catch up now.

In fact, there is no need to worry about regulation. When video websites emerged, there were concerns about regulatory issues; when P2P emerged, there were concerns about regulatory issues; and yes, there were concerns about regulatory issues when blockchain emerged...

Many well-known investment institutions have already invested in e-cigarettes; if you don't believe it, take a look.
Among these three brands, only LINX has publicly disclosed that it has completed two rounds of investment, including from CICC, and the third and fourth rounds are already in progress. YOOZ and FLOW have not yet announced anything publicly.

Zhu Xiaomu, the founder of FLOW, told Blue Hole New Consumption that he is currently not convenient to disclose financing situations and will announce them at an appropriate time.

According to news obtained by Blue Hole New Consumption, it is suspected that Jingwei may invest in FLOW, with a valuation of nearly 40 million USD.

Cai Yuedong, the founder of YOOZ, has started recruiting provincial and municipal agents in his circle of friends, possibly to establish offline sales channels.

Zhu Xiaomu also stated that he will lay out online and offline sales channels in the future, but currently has no specific plans.

Blue Hole New Consumption has observed that LINX used WeChat as its main marketing channel for pre-sales before the Spring Festival, including non-headline recommendations from a few public accounts like Military Weapons and Tongdao Dashi, as well as dissemination in the WeMedia alliance's large V friends circle, with over 5,000 units pre-sold within 45 hours.

YOOZ's external communication data relies on Cai Yuedong's old friends and friends' circles, achieving a sales volume of 5 million yuan in a single day. FLOW was initially announced for pre-sale on Taobao by Luo Zhi, and there were no significant signs of using new media channels; Zhu Xiaomu does not plan to disclose the latest sales data.

The China E-Cigarette Information Network has observed that Zhu Xiaomu currently has 260,000 followers on Weibo, which may be a very important new media channel for FLOW to communicate with users. Zhu Xiaomu interacts with users who share their experiences on Weibo and uses humorous comments to praise them.

YOOZ's biggest embarrassment may be the lack of its own new media channels. After leaving Tongdao Dashi, Cai Yuedong has become a "layman" without new media channels. If he wants to continue in new media marketing, he will need to purchase external traffic, which will involve cost issues.

According to Zhang Jinyuan, LINX's new media resources have used less than one ten-thousandth. The upcoming February 26 is the official shipping date for LINX, and its test has just begun.
#p#分页标题#e#
These three companies also share some common traits, with a marketing focus. Based on the currently available public information, it seems that they do not have core control over the supply chain, as the cigarette sticks, vaporizers, and devices need to be integrated by the supply chain. This raises our curiosity: are these e-cigarettes more like fast-moving consumer goods or more like electronic toys?

As an important product in the new consumption track, e-cigarettes can have many operational methods and gameplay. Due to the short development time, the potential of the three companies has not yet been fully revealed. Blue Hole will continue to pay attention, and we will also keep an eye on e-cigarette brands with different backgrounds in the upstream and downstream of the supply chain.

With the widespread popularity of mobile internet and the rise of experiential consumption, all consumer industries in China are worth redoing. Blue Hole New Consumption is very pleased to see more people with internet backgrounds joining the consumer goods industry and looks forward to seeing more consumer products that start from the user experience and combine new channels and new marketing to launch more interesting products.

The analysis of the e-cigarette market outlook has shown how big the vaping market is; this market is still a hot spot, and many capital tycoons have entered to start their own ventures. If you still want to make a fortune in the e-cigarette industry, you can contact WeChat: vapeos or call our e-cigarette market manager at: 17682343645.