Why Is YOOZ E-Cigarette So Popular?

Why is YOOZ e-cigarette so popular? "This is quite amazing; he had a strong smoking addiction, but after this, he basically stopped smoking. I was deeply touched." Last August, Cai Yuedong's father came to Beijing. His father is a "heavy smoker" who had always been advised to smoke less. Later, he bought his tea-loving father a green tea-flavored e-cigarette. Unexpectedly, after two weeks of continuous use, his father felt great and gradually gave up traditional cigarettes.

This incident stimulated Cai Yuedong, and he began visiting factories to understand the actual situation of the e-cigarette industry from various major brands. Eventually, he discovered that e-cigarette factories were facing a shortage of production capacity. "This surprised me; most of their products were average but still in high demand. I felt there were opportunities for better products to emerge."

After discovering these issues, Cai Yuedong decided to start his own e-cigarette brand. Six months later, on January 20, he announced in his social circle that the e-cigarettes of his brand "YOOZ" were available for immediate sale. Just five days before, on January 15, Luo Yonghao announced at a press conference for Kuairu Technology that Zhu Xiaomu, the former product director of Smartisan Technology and employee number 001, had founded the "flow" e-cigarette brand. Additionally, former Didi executive Wang Ying and Visual志 founder Sha Xiaopi also entered the e-cigarette market one after another.

With entrepreneurs flocking to the industry, e-cigarettes became the first "windfall" of 2019. Even Zhang Gengbin, the founder of the "IV Aiwei" e-cigarette brand, which has been in the market for nearly three years, accelerated online sales—originally a relatively stable market rhythm was disrupted, forcing everyone to speed up to compete.

On January 20, Cai Yuedong's "YOOZ" e-cigarette achieved a sales revenue of 5 million yuan on its first day. Cai Yuedong does not deny that his previous entrepreneurial aura accelerated the sales of the product and attracted market attention.

Cai Yuedong is the founder of "Tongdao Daxu," one of the most commercially valuable zodiac IPs on the internet. He became a billionaire as early as 2016. At the end of that year, Tongdao Daxu was acquired by Meisheng Holdings Group, and Cai Yuedong cashed out a billion yuan. After that, he spent six months in Silicon Valley with the mindset of wanting to start a new venture.

During his time in Silicon Valley, he learned a lot. After understanding the lifestyles and entrepreneurial methods of many serial entrepreneurs in Silicon Valley, he realized that entrepreneurship does not have to be a bitter and resentful process; it can be more professional and systematic. "Their entire entrepreneurial system is more like treating entrepreneurship as an experimental process, hypothesizing a demand, and then quickly validating and realizing it," Cai Yuedong told this publication.

With this change in mindset, Cai Yuedong returned to China. Starting in June 2018, he began receiving business plans for various e-cigarette projects. He himself had become an e-cigarette user two years prior, using heated tobacco products at that time, but he felt the overall experience was not convenient enough.

Cai Yuedong believes that the combustion method used in traditional tobacco will not be a long-term trend in the future.

Tobacco originated in Central and South America. In 1492, Columbus discovered the New World and found the indigenous people smoking tobacco. Later, sailors brought tobacco seeds to Europe and began planting them, marking the beginning of the global smoking history. Tobacco was introduced to Japan in 1590 and reached Fujian and Quanzhou in China in the late 16th and early 17th centuries, starting the journey of tobacco in China. Today, tobacco has spread to nearly a hundred countries worldwide. After more than 500 years of development and popularization, it has captured a large number of smokers, with the number of tobacco users globally reaching 1.1 billion. However, for many young people, smoking traditional cigarettes has become uncool, and e-cigarettes may be the "variable" in this industry.

According to global tobacco development statistics, the global e-cigarette sales reached 10 billion USD in 2017, with a growth rate of 5%. Although 90% of e-cigarettes are produced in Shenzhen, the Chinese e-cigarette market only accounts for 5% of the global market.

"I believe that e-cigarettes have the potential to bring about revolutionary changes," said Cai Yuedong. At the same time, he also observed the rapid development of Juul, the leading e-cigarette brand in the United States.

After deciding to start his own e-cigarette brand, Cai Yuedong invited his longtime friend He Chang—the founder of Huang Taiji pancake shop. Cai Yuedong highly praises He Chang, saying, "He has a very good understanding of brand marketing, and working with him increases the chances of success." He emphasized that He Chang has an advertising background and has worked at major companies like Google and Baidu, has design skills, and has a requirement for product aesthetics while understanding the logic of rapidly changing internet products, making him a great partner. However, initially, non-smoker He Chang was not very interested in e-cigarettes. Later, Cai Yuedong took him to experience many products, and He Chang saw the reactions of people around him after using e-cigarettes, judging that there would be a huge market behind this.

Despite Cai Yuedong stating that they have been very restrained in marketing, the e-cigarette market has indeed heated up since the arrival of 2019. Zhang Gengbin, the founder of the "IV Aiwei" e-cigarette brand, also stated that he has seen an increase in investors interested in the e-cigarette market.

Behind e-cigarettes is a huge profit-driven industry. According to global tobacco development statistics, the global e-cigarette sales reached 10 billion USD in 2017, with a growth rate of 5%. According to reports from Tencent Deep Web, data shows that about 90% of vapor e-cigarette products and accessories are produced in China. Among the top five brands of small e-cigarettes in the US market, three are produced by Chinese e-cigarette companies, and all of the top five open e-cigarette brands are also produced and exported by Chinese companies.

Several e-cigarette practitioners interviewed by this publication stated that as the most popular e-cigarette in the US, Juul's success has shown them opportunities. Cao Qian, a director at Boke Consulting, has been deeply researching the e-cigarette field since 2016. "Juul launched a USB-shaped e-cigarette in June 2015, and by early 2017 to the end of 2018, it occupied 75% of the US e-cigarette market share, shaking the entire e-cigarette industry and making it feel like a new industry is emerging." Cao Qian said.

Additionally, according to media reports, at the end of 2018, Altria Group (the manufacturer of Marlboro cigarettes) injected 12.8 billion USD into Juul, acquiring 35% of the company. The founders of JUUL, Adam Bowen and James Monsees, became the first e-cigarette billionaires due to this acquisition. Bloomberg analyst Ken Shea analyzed that e-cigarettes are a disruptive technology that reflects consumer trends. The rapid development of e-cigarettes has led traditional tobacco companies like Altria to seek methods that can reduce cigarette use while considering the future of the company.