Why Are More Smartphone Makers Entering the Vaping Market?

Why are more and more cell phone manufacturers entering e-cigarettes?In 2017, Xiaomi crowdfunded a disposable e-cigarette called & ldquo; A&D energy bar & rdquo;; In May 2018, the cell phone brand Coolpad and focus on the field of e-cigarette related products & ldquo; source Green & rdquo; signed a strategic cooperation agreement; January 15, 2019, the Luo Yonghao released a new collaborative e-cigarette product — — Flow (Flow).
 
Why are more and more cell phone manufacturers getting into e-cigarettes?

First, it is a mass consumer product: the popularity of e-cigarettes is getting higher and higher, and the post-95 generation has become the main consumer force, which makes e-cigarettes gradually become a mass consumer product from the niche;
Second, the same as electronic products: although the appearance and function of electronic cigarettes and cell phones are very different, but they are electronic products. The most important point is that the e-cigarette market has unlimited business opportunities!

The first big wind mouth industry in the VC circle: electronic cigarettes
China has one-third of the world's smokers, nearly 350 million people. According to a recent survey by the World Health Organization, compared to 2000, the total number of global smokers decreased by 40 million in 2018, of which more than 35 million people switched to e-cigarettes. Among these people, about half of the users believe that e-cigarettes are more “healthy” than traditional cigarettes, and try to use it to quit smoking.

With such a scale of conversion rate and such a huge emerging market, capital will certainly not be absent. The e-cigarette industry has been hailed as the first major wind mouth industry in 2019 by the venture capital circle, with a total of more than 50 e-cigarette investment and financing cases since 2018.

In 2016, China's e-cigarette production was 1.21 billion sticks, and the market consumption scale was about 3.2 billion yuan, while the sales revenue of the cigarette industry in that year was 1,370.6 billion yuan. This means that China's e-cigarette market currently accounts for only 0.23% of the tobacco industry.

In 2018, the domestic e-cigarette industry entered an important stage of product research and development, brand building, and consumer cultivation, and the preliminary estimation of China's e-cigarette production reached about 2.229 billion units in 2018, and it is predicted that China's e-cigarette production will reach 2.898 billion units in 2019, and the production of e-cigarettes in China will reach 4.753 billion units by 2022.

E-cigarette industry chain dissection


The four core elements of e-cigarettes: cigarette oil, control chip, atomizer, and battery.
At the level of upstream raw materials, it can be divided into raw material suppliers of batteries (batteries, batteries, control circuits), raw material suppliers of atomizers (plastics, glass, hardware, heating resistors) and raw material suppliers of cigarette oil. In the cost structure of e-cigarettes, batteries account for the highest proportion, reaching 55% of the total cost, followed by atomizers accounting for 35%.

The midstream is mainly the design and manufacture of electronic cigarettes, which can be divided into two categories: professional e-cigarette manufacturing enterprises and the manufacturing departments of international tobacco giants. Domestic private brands account for a small proportion of the market, and domestic cigarette oil companies are mainly based on the OEM/ODM model, which is an OEM production for well-known foreign brands.

Downstream through agents and distributors to retailers, including well-known e-cigarette brand owners, large supermarkets, convenience stores and pharmacies.