Can the Vaping Industry Last in the Long Term?
Can the vaping industry last in the long term? Two packs a day—after dinner until midnight, one pack is gone. Song Chunfan (a pseudonym) is not very old, but can already be considered a heavy smoker. He came into contact with e-cigarettes while trying to
Can the e-cigarette industry last long? Two boxes of cigarettes a day, and after dinner by 12 a.m., one box of cigarettes is exhausted.& rdquo; Song Chunfan (pseudonym) is not old, but he can be regarded as a veteran smoker. He came into contact with e-cigarettes because he quit smoking, and now he has joined the e-cigarette entrepreneurial army. There are many entrepreneurs like Song Chunfan.
The threshold for the e-cigarette industry is very low. A brand can be established with about 5 million yuan, supplied by domestic e-cigarette manufacturers. The products are sold online and offline channels, with annual sales of more than 10,000 cigarettes. An e-cigarette with a price of less than 300 yuan has a purchase price of about 30 yuan. Industry insiders told Pencil that the gross profit of the e-cigarette industry starts at 70%. rdquo;
In 2018, about 6 domestic e-cigarette projects made public financing news, and well-known institutions such as Source Capital, IDG, and Innocent Angel Fund joined in. The long-silent e-cigarette track instantly became high-profile.
As the tide of capital recedes, the attention of institutions shows the positive development trend of the e-cigarette industry. An industry has been developing for 20 years, why hasn't a leading company emerged on the product side of the local market? The policies related to e-cigarettes are unclear and the situation is embarrassing. Why do entrepreneurs enter the market one after another? What kind of prickly new air outlet is e-cigarettes?
Note: The content of this article mainly comes from interviews with reporters on Pencil Road and public information on the Internet. The arguments are inevitably biased and there is no deliberate misleading.
barbed tuyere
95% of e-cigarettes are produced in China, while domestic market consumption accounts for only 6%. Some industry insiders conservatively revealed that there are 300 million smokers in China, and by the end of 2017, there will be about 1 million e-cigarette users. It can be seen that the current user base of domestic e-cigarettes is not large, with a penetration rate of only three thousandths.
However, there is also one dynamic data that cannot be ignored. From 2010 to 2018, e-cigarette sales increased nearly 20 times, and the benefits behind it are difficult for entrepreneurs and most investors to refuse. What's more, in foreign countries, the story of making wealth by e-cigarettes has been born.
Juul Labs, an American e-cigarette startup, decided in December 2018 to pay a total of US$2 billion in year-end bonuses to all 1500 employees of the company in the form of a special dividend, with an average of US$1.3 million per person. ldquo; The news of the sky-high year-end bonus even became a hot topic that day.
Founded in 2007, Pax Labs specializes in producing e-cigarettes. In 2015, it launched an e-cigarette called Juul. In 2017, Juul Labs, the department responsible for juul e-cigarettes, was separated from the head office and operated independently.
Just one year after independence, Juul quickly grew into a super unicorn. In July 2018, Juul was valued at US$15 billion. Five months later, it reached an investment agreement with Marlboro cigarette manufacturer Altria Group to acquire a 35% stake for US$12.8 billion, and the valuation jumped to US$38 billion. According to Nielsen survey data, Juul's sales increased by 800% last year and has more than two-thirds of the U.S. market share.
E-cigarettes are a trend culture in Europe and the United States. They are no longer the way to quit smoking as many people think, but have become a new plaything for many people. E-cigarette smoking among teenagers has spread like an epidemic in the United States.
Looking at China, the development of e-cigarette user groups and market education are related to the length and breadth of industry development, and this is also a major problem facing entrepreneurs.
E-cigarette entrepreneur Su Xiaoyun (pseudonym) does not smoke himself. Her father has smoked for decades. ldquo; My father is used to smoking traditional cigarettes, and now he is suddenly asked to smoke oily e-cigarettes, but he will hardly accept it." rdquo; In fact, many old smokers have developed their smoking habits, and their tastes are difficult to change for more than ten years. After getting used to traditional cigarettes and smoking oily e-cigarettes, you will find that the experience is much different.
“Domestic consumer demand for application-oriented electronics is not large, which is the core reason.& rdquo; Su Xiaojun believes that cultivating users 'consumption habits seems unreliable when it comes to smoking, but this matter is actually a bit of a moral problem."“ rdquo;
In September 2018, the U.S. Food and Drug Administration (FDA) required Juul to take 60 days to prove that minors were unable to obtain its e-cigarette products, otherwise it would make the products unmarketable.
With their huge market share, young people have become the main force in e-cigarette consumption. Su Xiaoyun said that there will also be a problem in opening up the young people market. If young people take drugs, I believe the country will take action to rectify it. rdquo;
#p#Pagination Title #e#
Zhao Yangxi (pseudonym) has been in business with e-cigarettes for five years and is also an e-cigarette user himself. He believes that the current e-cigarette market tends to be clearly market-oriented, with functional smoking cessation being second, and the experience market being the main direction of the e-cigarette industry.
He continued to explain that some people are willing to experience e-cigarettes. After all, the biggest market for e-cigarettes is not experience, but the pursuit of a new way of smoking.
In different eras, people have different perceptions of new things. ldquo; Most people started smoking e-cigarettes because they were very fashionable and very stylish to use. In the end, they found that e-cigarettes were not bad to use. There were many different flavors, which were unacceptable to cigarettes, and they gradually became accustomed to it." rdquo;
From this point of view, the control of the quality and brand effect of e-cigarette products are the main factors for the long-term development of the e-cigarette industry.
Zhao Yangxi also talked about technical issues. The development of every new product and new technology must be a process from zero to one, including materials, tobacco oil formulas, etc. If e-cigarettes can be really healthy and non-harmful, this industry will have a future.
For the common e-cigarettes of brands such as relx, MOTI, and YOOZ on the market, the project party usually supplies them from well-known foundries such as McWeir and Zhuoyue, then prints their own brand names, and delivers the products through retail channels. Delivered to consumers.
For a time, forces from various venture capital circles flocked to the e-cigarette track, which was full of wind but with thorns.
In April 2018, Didi executive Wang Ying left her post. A month later, she joined RELAX's parent company, Wuxin Technology. Her partner was named Du Bing. She was born in 1991, graduated from Zhejiang University with a major in industrial design, and studied in France. International student. Another month later, RELX received 38 million yuan in financing.
Zhu Xiaomu, the No. 1 employee of Hammer Technology, registered and established an e-cigarette company on November 12, 2018. Its product is called flow Fulu, with a registered capital of 1 million yuan. Zhu Xiaomu invested 960,000 yuan, holding 96%.
In January 2019, Cai Yuedong, the number one IP fellow uncle in the country's constellation, released a poster in the circle of friends, saying that starting a business again requires your support and announced the launch of yooz e-cigarettes in stock. This e-cigarette brand, jointly created by Cai Yuedong and He Chang, former founder of Huang Taiji, did not rely on Taobao channels, but only relied on its network of friends to sell. It was launched 24 hours a day and sold for 5 million yuan.
According to relevant media, on January 27, at the annual meeting of mining machinery giant Jianan Yunzhi, an e-cigarette called wel Whale Light Cigarette appeared in public view. Insiders said it was the co-chairman of Jianan Yunzhi. The brand they made.
Of course, there are more new brands emerging, and many well-known figures in the circle participate in it, hiding behind the track and operating silently.
Capital enters
E-cigarettes are tied to making quick money. But many industry people do not think so.
Entrepreneur Song Chunfan lives in a coastal city, where there are at most more than 20 e-cigarette physical stores. Now there are less than 5 stores left, and they basically cannot withstand the end. “From the manufacturing end to the product end, no one considers the user experience. In addition, the gross profit required by physical stores is very high, the price is expensive, the products are unreliable, and the physical stores have no after-sales service. Users use one batch and leave one batch, fewer and fewer people.
He believes that in fact, the e-cigarette industry lacks product managers. A person who truly understands users can organically integrate product design, market pricing, market demand, etc. Many current e-cigarette projects just use the brand effect to attract a group of people who like the market to buy, and then leave the market soon.
Internet practitioner Su Yeze (pseudonym) expressed his disagreement with the idea of making quick money. E-cigarette products are not yet in the domestic market, and e-cigarettes are indeed healthier than cigarettes and have huge market demand. It is normal for everyone to follow up if they feel there is an opportunity." rdquo;
The development of every industry has a step-by-step process. When Internet people enter the e-cigarette market, it is very difficult to complete all production links at once. Moreover, they also have to face sales problems at the beginning. Therefore, it is reasonable to rely on OEM supplies." rdquo;
The domestic e-cigarette market has developed for nearly 20 years, which is nothing new.
Su Xiaoyun said: The current popularity of the track is only because the investment circle has begun to pay attention to it. In fact, this industry has entered a stable period, and McWeir and Zhuoyue have become leading companies in the industry. If you don't pay attention to the brand side, the industry pattern has been set.& rdquo;#p#pagination title #e#
She does not seem to be so optimistic about the future development of e-cigarette brands. ldquo; More than 90% of the world's e-cigarettes are produced in Shenzhen, China. China has strong manufacturing capabilities, but the domestic market is still not ready, indicating that China market may not be suitable for this business model. rdquo;
Su Yeze thought exactly the opposite. Although the e-cigarette audience is small, all smokers nowadays are likely to be converted. This is compared to 15 years ago, when there were fewer online shoppers and three years ago, when there were fewer people on Weixin Pay.
Of course, there are already domestic startups that have been helped to lead the way by capital, such as RELX. This e-cigarette company started in January 2018. Within half a year of its establishment, it was led by source code capital. IDG invested 38 million yuan in angel round financing and became a star project on the e-cigarette track for a time.
Relevant sources told Pencil that in August and September 2018, Yueshi's monthly turnover was about 10 million yuan. From a single brand perspective, Yueshi has made it ahead of schedule. Currently, Yueshi is the only one in the industry that has achieved this amount of water. However, if you look at the entire e-cigarette manufacturing industry, it is actually very small, with several leading companies in the industry. OEM factories have annual shipments reaching billions or even tens of billions." rdquo;
Plum Blossom Angel Wu Shichun released a circle of friends about e-cigarettes in January. ldquo; What is the most popular domestic hardware entrepreneurship recently? The answer is: e-cigarettes!
Will this not affect the income of China's tobacco, a major tax generator? Reaching out and touching this cake when the country is so short of money... What will happen?& rdquo;
Zhu Xiaohu on the Jinsha River left a message below the message,"It's okay if you don't make money." rdquo; Wu Shichun responded that he watched many of them but didn't vote later.
In addition, Wu Shichun also said that smoking is harmful to health, but it is good for taxation. I think the country should monopolize addictive things, whether they are electronic or not. rdquo;
Wu Shichun made remarks about e-cigarettes in his circle of friends.
Tiantu Investment Wei Guoxing once shared his investment logic in public. Addictive products are one of the categories favored by capital. Tobacco, wine, tea and other products are generally addictive products. Such products are generally insensitive to price and flexible. Low, higher profits.
Relevant persons revealed to Pencil Road that the industry's gross profit started at 70%. An e-cigarette that sells for less than 300 yuan will cost about 30 yuan when purchased from the manufacturing end.
High-margin e-cigarettes have attracted many entrepreneurs to it. Everything has two sides, and the hidden diseases in the industry seem to have never been eliminated.
Chen Muyang told Pencil that the e-cigarettes that entrepreneurs get from the factory are only specific products at a certain point in time. The high-speed iterative e-cigarette industry requires entrepreneurs to grasp the product direction themselves. ldquo; Because the interests of the factory are in conflict with the interests of the brand, the factory only wants to give you a product that will last forever, but as a brand, you need to cater to market demand and constantly produce the best products." rdquo;
According to statistics from online public data, between 2015 and 2018, about 10 e-cigarette projects received financing, of which the total domestic project financing was 510 million yuan. GuangIJOY Aizhuoyi and his family received 300 million yuan in Series A financing. The investors are individual investors, so far, it has become the highest-funded project in the domestic e-cigarette industry within three years.
“Laan Shanlan started in 2016. Two years after its establishment, the company received financing from Yingnuo Angel Fund and an individual investor. The company's founder Zhu Yaxuan was an industrial designer in Tencent's WeChat department, which is also the reason why Laan Shanlan's product appearance experience is relatively outstanding. One of the reasons.
It is worth noting that most of these project financing are Angel Round, Pre-A Round, and A Round, and there are no projects with post-investment.
It is speculated that the capital side is currently in a wait-and-see state, which is also due to the cold winter of capital. The participation of well-known institutions such as Source Capital, IDG, and Zhenge Fund has added a lot of luster to the e-cigarette track to some extent.
Sword of Damocles above his head
As an emerging product, e-cigarettes have developed rapidly in the past ten years. According to statistics, in 2010, the global e-cigarette market size was US$416 million. Until 2016, the market capacity expanded to US$7.1 billion. In six years, the e-cigarette market capacity expanded 17 times, with a compound annual growth rate of 60.5%.
According to statistics, in 2016, China's e-cigarette output was 1.205 billion, in 2017 it was approximately 1.6 billion, and in 2018 it was approximately 2.2 billion. Compared with the domestic consumption of e-cigarettes is only 6%, exports to European and American markets account for 83.7% of the export share.# p#pagination title #e#
Industry insiders predict that the future e-cigarette market will continue to maintain rapid growth. In 2018, the industry scale will exceed 10 billion US dollars. During this period, the compound annual growth rate will be 50%. Judging from the magnitude of about 1 billion smokers in the world, e-Cigarette consumers account for 2% of the total number of smokers.
The e-cigarettes produced by China's e-cigarette manufacturers are mainly exported abroad. The domestic e-cigarette industry chain is divided into three links: raw materials-design and manufacturing-sales, upstream, midstream and downstream.
Raw material processing includes atomizers, batteries, cigarette oil, display screens and other accessories. Manufacturers will provide them to brand companies through ODM/OEM, and brand companies will supply e-cigarettes to retail stores through their own sales channels, agents and distributors. Store, sell to consumers.
Song Chunfan told Pencil that the cost of signing a channel provider is very high. It looks like a company that is doing a good job, and its channel provider is at least 10,000 or more. ldquo; Tmall is definitely the mainstream channel, accounting for 60% of the total, and Jingdong accounts for about 20%. Cooperation with online stores and flagship stores and other instruments accounts for about 20%." rdquo;
The forward-looking industry research report shows that in the future, companies with channel advantages are expected to rely on stable order resources to complete the layout of the entire e-cigarette industry chain, realize the shift from B2B to B2C, strengthen upstream and downstream control, and at the same time obtain more profits in the industrial chain.
The future of e-cigarettes may be possible, but the industry is in an awkward state at this stage. Currently, employees in the e-cigarette industry have a sword of Damocles hanging above their heads, and no one knows when it will fall. Everyone is guessing." rdquo;
Chen Muyang's statement is almost similar to Song Chunfan's. ldquo; The e-cigarette conversion rate in the United States is 13%, but China is not even 5%. Talking about whether China's e-cigarette market will usher in development opportunities, I think when China's e-cigarette conversion rate reaches a certain point, there will be a systemic policy risk. rdquo;
E-cigarettes have been dubbed as smoking cessation since their inception. In the first half of 2012, the relevant person in charge of the Ministry of Health stated that it would deepen medical reform to help smoking cessation, and gradually incorporate smoking cessation counseling and drugs into basic medical insurance. However, e-cigarettes are not classified under the scope of medical supervision.
In October 2018, the Chief Executive of the Hong Kong Special Administrative Region, Cheng Yuet-ngo, delivered her 2018 policy address in the Legislative Council of the Special Administrative Region, proposing a complete ban on the sale of e-cigarettes and other new tobacco products. It is worth noting that previously, the Hong Kong government only restricted the sale of e-cigarettes to minors.
It is not included in medical care, tobacco, and does not completely belong to the category of consumer electronic goods. E-cigarettes are in a dilemma.
An entrepreneur told Pencil that it is actually a good thing that e-cigarettes are not included in the tobacco queue. They don't have to pay tobacco taxes, but they can sell them at the same price as tobacco." rdquo;
In Su Yeze's view, doing a good job in this industry is also based on the principle of 28, which means that 80% of people are losing money and making money.
In 1963, a man named Herbert. Americans in Gilbert invented the first e-cigarette to quit smoking. At that time, tobacco was booming and investors believed that there was no market demand for this thing, so Gilbert's invention was shelved;
In 2003, a pharmaceutical engineer smoker named Han Li also developed an e-cigarette that could quit smoking for the purpose of quitting smoking, named Ruyan. Using high-concentration nicotine solution as tobacco oil and heating resistance wire as heat source, an electronic cigarette formed by liquid evaporation is made. This electronic atomization product was almost a household name at that time, and sold more than 100 million yuan in its first year.
In 2006, CCTV exposed that Ruyan's smoking cessation effect was false. A spokesperson for the State Tobacco Monopoly Administration told many media that Ruyan's publicity effect was inaccurate and requested that it be handed over to him for control.
A series of negative news has pushed Ruyan's safety and quality supervision issues to the forefront. Sales performance was severely halved and Ruyan was forced to abandon the domestic market. At this time, other e-cigarette brands also turned overseas.
Ruyan is not like a fish in water in overseas markets. Because there are not enough technical barriers, many famous foreign tobacco companies have developed their own e-cigarette products.
In 2012, Ruyan was recognized for its invention patent in the United States and began to file lawsuits against more than ten international e-cigarette brands. Later results proved that Ruyan had long missed the best treatment time.
With Ruyan being acquired by a tobacco empire for US$75 million in 2013, the former e-cigarette giant Ruyan fell to the ground.
In April 2018, Song Chunfan's e-cigarette products were launched. The product has just been launched, sales are very small, and without sales data to support it, financing has become a major problem.# p#pagination title #e#
The cold wave of capital has swept across the venture capital circle, and VCs have obviously become a lot more rational. ldquo; I am very optimistic about your product and agree with the market style, but I cannot invest without data. I can listen to you, but I will not invest... When I meet someone who is more tactful, I have a good chat with you. Let's make friends! See if I have a chance to get in your next round.
Public opinion has surged, and the outside world has mixed praise and criticism for e-cigarettes. Against the background of capital winter, it is not easy to find a place in the e-cigarette industry.
At present, all Song Chunfan's company employees have been dismissed, leaving only four co-founders. Recently, he is trying to find a personal investor and thinking about starting mass production first. The product has reached this point, and it is not realistic to quit it. He admitted that he would rather advance slowly than choose to give up. rdquo;
The threshold for the e-cigarette industry is very low. A brand can be established with about 5 million yuan, supplied by domestic e-cigarette manufacturers. The products are sold online and offline channels, with annual sales of more than 10,000 cigarettes. An e-cigarette with a price of less than 300 yuan has a purchase price of about 30 yuan. Industry insiders told Pencil that the gross profit of the e-cigarette industry starts at 70%. rdquo;
In 2018, about 6 domestic e-cigarette projects made public financing news, and well-known institutions such as Source Capital, IDG, and Innocent Angel Fund joined in. The long-silent e-cigarette track instantly became high-profile.
As the tide of capital recedes, the attention of institutions shows the positive development trend of the e-cigarette industry. An industry has been developing for 20 years, why hasn't a leading company emerged on the product side of the local market? The policies related to e-cigarettes are unclear and the situation is embarrassing. Why do entrepreneurs enter the market one after another? What kind of prickly new air outlet is e-cigarettes?
Note: The content of this article mainly comes from interviews with reporters on Pencil Road and public information on the Internet. The arguments are inevitably biased and there is no deliberate misleading.
barbed tuyere
95% of e-cigarettes are produced in China, while domestic market consumption accounts for only 6%. Some industry insiders conservatively revealed that there are 300 million smokers in China, and by the end of 2017, there will be about 1 million e-cigarette users. It can be seen that the current user base of domestic e-cigarettes is not large, with a penetration rate of only three thousandths.
However, there is also one dynamic data that cannot be ignored. From 2010 to 2018, e-cigarette sales increased nearly 20 times, and the benefits behind it are difficult for entrepreneurs and most investors to refuse. What's more, in foreign countries, the story of making wealth by e-cigarettes has been born.
Juul Labs, an American e-cigarette startup, decided in December 2018 to pay a total of US$2 billion in year-end bonuses to all 1500 employees of the company in the form of a special dividend, with an average of US$1.3 million per person. ldquo; The news of the sky-high year-end bonus even became a hot topic that day.
Founded in 2007, Pax Labs specializes in producing e-cigarettes. In 2015, it launched an e-cigarette called Juul. In 2017, Juul Labs, the department responsible for juul e-cigarettes, was separated from the head office and operated independently.
Just one year after independence, Juul quickly grew into a super unicorn. In July 2018, Juul was valued at US$15 billion. Five months later, it reached an investment agreement with Marlboro cigarette manufacturer Altria Group to acquire a 35% stake for US$12.8 billion, and the valuation jumped to US$38 billion. According to Nielsen survey data, Juul's sales increased by 800% last year and has more than two-thirds of the U.S. market share.
E-cigarettes are a trend culture in Europe and the United States. They are no longer the way to quit smoking as many people think, but have become a new plaything for many people. E-cigarette smoking among teenagers has spread like an epidemic in the United States.
Looking at China, the development of e-cigarette user groups and market education are related to the length and breadth of industry development, and this is also a major problem facing entrepreneurs.
E-cigarette entrepreneur Su Xiaoyun (pseudonym) does not smoke himself. Her father has smoked for decades. ldquo; My father is used to smoking traditional cigarettes, and now he is suddenly asked to smoke oily e-cigarettes, but he will hardly accept it." rdquo; In fact, many old smokers have developed their smoking habits, and their tastes are difficult to change for more than ten years. After getting used to traditional cigarettes and smoking oily e-cigarettes, you will find that the experience is much different.
“Domestic consumer demand for application-oriented electronics is not large, which is the core reason.& rdquo; Su Xiaojun believes that cultivating users 'consumption habits seems unreliable when it comes to smoking, but this matter is actually a bit of a moral problem."“ rdquo;
In September 2018, the U.S. Food and Drug Administration (FDA) required Juul to take 60 days to prove that minors were unable to obtain its e-cigarette products, otherwise it would make the products unmarketable.
With their huge market share, young people have become the main force in e-cigarette consumption. Su Xiaoyun said that there will also be a problem in opening up the young people market. If young people take drugs, I believe the country will take action to rectify it. rdquo;
#p#Pagination Title #e#
Zhao Yangxi (pseudonym) has been in business with e-cigarettes for five years and is also an e-cigarette user himself. He believes that the current e-cigarette market tends to be clearly market-oriented, with functional smoking cessation being second, and the experience market being the main direction of the e-cigarette industry.
He continued to explain that some people are willing to experience e-cigarettes. After all, the biggest market for e-cigarettes is not experience, but the pursuit of a new way of smoking.
In different eras, people have different perceptions of new things. ldquo; Most people started smoking e-cigarettes because they were very fashionable and very stylish to use. In the end, they found that e-cigarettes were not bad to use. There were many different flavors, which were unacceptable to cigarettes, and they gradually became accustomed to it." rdquo;
From this point of view, the control of the quality and brand effect of e-cigarette products are the main factors for the long-term development of the e-cigarette industry.
Zhao Yangxi also talked about technical issues. The development of every new product and new technology must be a process from zero to one, including materials, tobacco oil formulas, etc. If e-cigarettes can be really healthy and non-harmful, this industry will have a future.
For the common e-cigarettes of brands such as relx, MOTI, and YOOZ on the market, the project party usually supplies them from well-known foundries such as McWeir and Zhuoyue, then prints their own brand names, and delivers the products through retail channels. Delivered to consumers.
For a time, forces from various venture capital circles flocked to the e-cigarette track, which was full of wind but with thorns.
In April 2018, Didi executive Wang Ying left her post. A month later, she joined RELAX's parent company, Wuxin Technology. Her partner was named Du Bing. She was born in 1991, graduated from Zhejiang University with a major in industrial design, and studied in France. International student. Another month later, RELX received 38 million yuan in financing.
Zhu Xiaomu, the No. 1 employee of Hammer Technology, registered and established an e-cigarette company on November 12, 2018. Its product is called flow Fulu, with a registered capital of 1 million yuan. Zhu Xiaomu invested 960,000 yuan, holding 96%.
In January 2019, Cai Yuedong, the number one IP fellow uncle in the country's constellation, released a poster in the circle of friends, saying that starting a business again requires your support and announced the launch of yooz e-cigarettes in stock. This e-cigarette brand, jointly created by Cai Yuedong and He Chang, former founder of Huang Taiji, did not rely on Taobao channels, but only relied on its network of friends to sell. It was launched 24 hours a day and sold for 5 million yuan.
According to relevant media, on January 27, at the annual meeting of mining machinery giant Jianan Yunzhi, an e-cigarette called wel Whale Light Cigarette appeared in public view. Insiders said it was the co-chairman of Jianan Yunzhi. The brand they made.
Of course, there are more new brands emerging, and many well-known figures in the circle participate in it, hiding behind the track and operating silently.
Capital enters
E-cigarettes are tied to making quick money. But many industry people do not think so.
Entrepreneur Song Chunfan lives in a coastal city, where there are at most more than 20 e-cigarette physical stores. Now there are less than 5 stores left, and they basically cannot withstand the end. “From the manufacturing end to the product end, no one considers the user experience. In addition, the gross profit required by physical stores is very high, the price is expensive, the products are unreliable, and the physical stores have no after-sales service. Users use one batch and leave one batch, fewer and fewer people.
He believes that in fact, the e-cigarette industry lacks product managers. A person who truly understands users can organically integrate product design, market pricing, market demand, etc. Many current e-cigarette projects just use the brand effect to attract a group of people who like the market to buy, and then leave the market soon.
Internet practitioner Su Yeze (pseudonym) expressed his disagreement with the idea of making quick money. E-cigarette products are not yet in the domestic market, and e-cigarettes are indeed healthier than cigarettes and have huge market demand. It is normal for everyone to follow up if they feel there is an opportunity." rdquo;
The development of every industry has a step-by-step process. When Internet people enter the e-cigarette market, it is very difficult to complete all production links at once. Moreover, they also have to face sales problems at the beginning. Therefore, it is reasonable to rely on OEM supplies." rdquo;
The domestic e-cigarette market has developed for nearly 20 years, which is nothing new.
Su Xiaoyun said: The current popularity of the track is only because the investment circle has begun to pay attention to it. In fact, this industry has entered a stable period, and McWeir and Zhuoyue have become leading companies in the industry. If you don't pay attention to the brand side, the industry pattern has been set.& rdquo;#p#pagination title #e#
She does not seem to be so optimistic about the future development of e-cigarette brands. ldquo; More than 90% of the world's e-cigarettes are produced in Shenzhen, China. China has strong manufacturing capabilities, but the domestic market is still not ready, indicating that China market may not be suitable for this business model. rdquo;
Su Yeze thought exactly the opposite. Although the e-cigarette audience is small, all smokers nowadays are likely to be converted. This is compared to 15 years ago, when there were fewer online shoppers and three years ago, when there were fewer people on Weixin Pay.
Of course, there are already domestic startups that have been helped to lead the way by capital, such as RELX. This e-cigarette company started in January 2018. Within half a year of its establishment, it was led by source code capital. IDG invested 38 million yuan in angel round financing and became a star project on the e-cigarette track for a time.
Relevant sources told Pencil that in August and September 2018, Yueshi's monthly turnover was about 10 million yuan. From a single brand perspective, Yueshi has made it ahead of schedule. Currently, Yueshi is the only one in the industry that has achieved this amount of water. However, if you look at the entire e-cigarette manufacturing industry, it is actually very small, with several leading companies in the industry. OEM factories have annual shipments reaching billions or even tens of billions." rdquo;
Plum Blossom Angel Wu Shichun released a circle of friends about e-cigarettes in January. ldquo; What is the most popular domestic hardware entrepreneurship recently? The answer is: e-cigarettes!Will this not affect the income of China's tobacco, a major tax generator? Reaching out and touching this cake when the country is so short of money... What will happen?& rdquo;
Zhu Xiaohu on the Jinsha River left a message below the message,"It's okay if you don't make money." rdquo; Wu Shichun responded that he watched many of them but didn't vote later.
In addition, Wu Shichun also said that smoking is harmful to health, but it is good for taxation. I think the country should monopolize addictive things, whether they are electronic or not. rdquo;
Wu Shichun made remarks about e-cigarettes in his circle of friends.
Tiantu Investment Wei Guoxing once shared his investment logic in public. Addictive products are one of the categories favored by capital. Tobacco, wine, tea and other products are generally addictive products. Such products are generally insensitive to price and flexible. Low, higher profits.
Relevant persons revealed to Pencil Road that the industry's gross profit started at 70%. An e-cigarette that sells for less than 300 yuan will cost about 30 yuan when purchased from the manufacturing end.
High-margin e-cigarettes have attracted many entrepreneurs to it. Everything has two sides, and the hidden diseases in the industry seem to have never been eliminated.
Chen Muyang told Pencil that the e-cigarettes that entrepreneurs get from the factory are only specific products at a certain point in time. The high-speed iterative e-cigarette industry requires entrepreneurs to grasp the product direction themselves. ldquo; Because the interests of the factory are in conflict with the interests of the brand, the factory only wants to give you a product that will last forever, but as a brand, you need to cater to market demand and constantly produce the best products." rdquo;
According to statistics from online public data, between 2015 and 2018, about 10 e-cigarette projects received financing, of which the total domestic project financing was 510 million yuan. GuangIJOY Aizhuoyi and his family received 300 million yuan in Series A financing. The investors are individual investors, so far, it has become the highest-funded project in the domestic e-cigarette industry within three years.
“Laan Shanlan started in 2016. Two years after its establishment, the company received financing from Yingnuo Angel Fund and an individual investor. The company's founder Zhu Yaxuan was an industrial designer in Tencent's WeChat department, which is also the reason why Laan Shanlan's product appearance experience is relatively outstanding. One of the reasons.
It is worth noting that most of these project financing are Angel Round, Pre-A Round, and A Round, and there are no projects with post-investment.
It is speculated that the capital side is currently in a wait-and-see state, which is also due to the cold winter of capital. The participation of well-known institutions such as Source Capital, IDG, and Zhenge Fund has added a lot of luster to the e-cigarette track to some extent.
Sword of Damocles above his head
As an emerging product, e-cigarettes have developed rapidly in the past ten years. According to statistics, in 2010, the global e-cigarette market size was US$416 million. Until 2016, the market capacity expanded to US$7.1 billion. In six years, the e-cigarette market capacity expanded 17 times, with a compound annual growth rate of 60.5%.
According to statistics, in 2016, China's e-cigarette output was 1.205 billion, in 2017 it was approximately 1.6 billion, and in 2018 it was approximately 2.2 billion. Compared with the domestic consumption of e-cigarettes is only 6%, exports to European and American markets account for 83.7% of the export share.# p#pagination title #e#
Industry insiders predict that the future e-cigarette market will continue to maintain rapid growth. In 2018, the industry scale will exceed 10 billion US dollars. During this period, the compound annual growth rate will be 50%. Judging from the magnitude of about 1 billion smokers in the world, e-Cigarette consumers account for 2% of the total number of smokers.
The e-cigarettes produced by China's e-cigarette manufacturers are mainly exported abroad. The domestic e-cigarette industry chain is divided into three links: raw materials-design and manufacturing-sales, upstream, midstream and downstream.
Raw material processing includes atomizers, batteries, cigarette oil, display screens and other accessories. Manufacturers will provide them to brand companies through ODM/OEM, and brand companies will supply e-cigarettes to retail stores through their own sales channels, agents and distributors. Store, sell to consumers.
Song Chunfan told Pencil that the cost of signing a channel provider is very high. It looks like a company that is doing a good job, and its channel provider is at least 10,000 or more. ldquo; Tmall is definitely the mainstream channel, accounting for 60% of the total, and Jingdong accounts for about 20%. Cooperation with online stores and flagship stores and other instruments accounts for about 20%." rdquo;
The forward-looking industry research report shows that in the future, companies with channel advantages are expected to rely on stable order resources to complete the layout of the entire e-cigarette industry chain, realize the shift from B2B to B2C, strengthen upstream and downstream control, and at the same time obtain more profits in the industrial chain.
The future of e-cigarettes may be possible, but the industry is in an awkward state at this stage. Currently, employees in the e-cigarette industry have a sword of Damocles hanging above their heads, and no one knows when it will fall. Everyone is guessing." rdquo;
Chen Muyang's statement is almost similar to Song Chunfan's. ldquo; The e-cigarette conversion rate in the United States is 13%, but China is not even 5%. Talking about whether China's e-cigarette market will usher in development opportunities, I think when China's e-cigarette conversion rate reaches a certain point, there will be a systemic policy risk. rdquo;
E-cigarettes have been dubbed as smoking cessation since their inception. In the first half of 2012, the relevant person in charge of the Ministry of Health stated that it would deepen medical reform to help smoking cessation, and gradually incorporate smoking cessation counseling and drugs into basic medical insurance. However, e-cigarettes are not classified under the scope of medical supervision.
In October 2018, the Chief Executive of the Hong Kong Special Administrative Region, Cheng Yuet-ngo, delivered her 2018 policy address in the Legislative Council of the Special Administrative Region, proposing a complete ban on the sale of e-cigarettes and other new tobacco products. It is worth noting that previously, the Hong Kong government only restricted the sale of e-cigarettes to minors.
It is not included in medical care, tobacco, and does not completely belong to the category of consumer electronic goods. E-cigarettes are in a dilemma.
An entrepreneur told Pencil that it is actually a good thing that e-cigarettes are not included in the tobacco queue. They don't have to pay tobacco taxes, but they can sell them at the same price as tobacco." rdquo;
In Su Yeze's view, doing a good job in this industry is also based on the principle of 28, which means that 80% of people are losing money and making money.
In 1963, a man named Herbert. Americans in Gilbert invented the first e-cigarette to quit smoking. At that time, tobacco was booming and investors believed that there was no market demand for this thing, so Gilbert's invention was shelved;
In 2003, a pharmaceutical engineer smoker named Han Li also developed an e-cigarette that could quit smoking for the purpose of quitting smoking, named Ruyan. Using high-concentration nicotine solution as tobacco oil and heating resistance wire as heat source, an electronic cigarette formed by liquid evaporation is made. This electronic atomization product was almost a household name at that time, and sold more than 100 million yuan in its first year.
In 2006, CCTV exposed that Ruyan's smoking cessation effect was false. A spokesperson for the State Tobacco Monopoly Administration told many media that Ruyan's publicity effect was inaccurate and requested that it be handed over to him for control.
A series of negative news has pushed Ruyan's safety and quality supervision issues to the forefront. Sales performance was severely halved and Ruyan was forced to abandon the domestic market. At this time, other e-cigarette brands also turned overseas.
Ruyan is not like a fish in water in overseas markets. Because there are not enough technical barriers, many famous foreign tobacco companies have developed their own e-cigarette products.
In 2012, Ruyan was recognized for its invention patent in the United States and began to file lawsuits against more than ten international e-cigarette brands. Later results proved that Ruyan had long missed the best treatment time.
With Ruyan being acquired by a tobacco empire for US$75 million in 2013, the former e-cigarette giant Ruyan fell to the ground.
In April 2018, Song Chunfan's e-cigarette products were launched. The product has just been launched, sales are very small, and without sales data to support it, financing has become a major problem.# p#pagination title #e#
The cold wave of capital has swept across the venture capital circle, and VCs have obviously become a lot more rational. ldquo; I am very optimistic about your product and agree with the market style, but I cannot invest without data. I can listen to you, but I will not invest... When I meet someone who is more tactful, I have a good chat with you. Let's make friends! See if I have a chance to get in your next round.
Public opinion has surged, and the outside world has mixed praise and criticism for e-cigarettes. Against the background of capital winter, it is not easy to find a place in the e-cigarette industry.
At present, all Song Chunfan's company employees have been dismissed, leaving only four co-founders. Recently, he is trying to find a personal investor and thinking about starting mass production first. The product has reached this point, and it is not realistic to quit it. He admitted that he would rather advance slowly than choose to give up. rdquo;
