Brand Controversy: Does Shanghai Green New Have the Most Upside in the E-cigarette Industry?

Introduction: It is reported that there are currently four e-cigarette targets in the A-share market, namely Yiwei Lithium Energy, Shanghai Lvxin, Dongfeng Shares, and Jinjia Shares. With the development of the industry, there will definitely be more and more targets in the future, gradually growing into a sector worthy of financial attention. Focus on Shanghai Green New.
China e-cigarette information: There is no denying that the frequent actions of giants in 2014 and the outbreak in European and American markets all indicate that the e-cigarette industry is currently in an ignorant golden age. Currently, there are four e-cigarette targets in the A-share market, namely Yiwei Lithium Energy, Shanghai Lvxin, Dongfeng Shares, and Jinjia Shares. With the development of the industry, there will definitely be more and more targets in the future, gradually growing into a sector worthy of financial attention. Focus on Shanghai Green New.
We pay attention to e-cigarettes because a report by Goldman Sachs listed eight areas that may change the world. E-cigarettes are described as follows: (e-cigarettes) have the potential to completely change the tobacco industry. Imagine a product that might be more than 99% less harmful than ordinary cigarettes, provide a similar experience and be more economical. Goldman Sachs believes that e-cigarettes have the potential to change the current situation of the U.S. tobacco market and accelerate the decline in sales of traditional cigarettes. Goldman Sachs predicts that by 2020, e-cigarettes may account for more than 10% of sales and more than 15% of profits in the U.S. tobacco industry. rdquo;
Tobacco has always been a double-edged sword. It is not only a source of huge tax revenue for a country, but also brings physical harm and spiritual dependence to smokers in this country. While paying attention to this topic of e-cigarettes, I have been thinking about what kind of cigarettes will people smoke in the future? What comes to my mind is a future neo-human hippie wearing iWatch on his hands, Google GLASS on his head, and an e-cigarette in his mouth.
I believe that the emergence of e-cigarettes reflects more of a customer value: striving to take responsibility in an industry that is often regarded as controversial, reducing the impact of tobacco use on smokers themselves and their families and public health through innovative high-tech products, allowing smokers to enjoy the fun of smoking in a way that is more free, cheaper and more socially acceptable. The sharing and community-based e-cigarettes are also in line with the mobile Internet's replacement concept of the traditional cigarette industry.
In a certain period of time in the future, despite facing numerous constraints from laws, policies, markets, etc., the world's tobacco giants have seen new opportunities for e-cigarettes. China Tobacco has also established a Leading Group for New Cigarette Work of the State Tobacco Monopoly Administration, and established eight cigarette companies to carry out key research projects; it has determined that the development of new cigarettes is an important issue to establish new competitive advantages for the industry in the future and control the right to speak on future development.
What is an e-cigarette?
E-cigarettes, also known as electronic atomizers, are low-pressure microelectronic atomization equipment that atomizes a solution with tobacco flavor by heating into a smoke shape for smokers to use. They have the same appearance as cigarettes and are similar to cigarettes. taste. It is composed of microelectronic high-tech devices such as air sensing switches, intelligent control circuits, smart chips, and lithium-ion batteries. It is mainly used to replace traditional cigarettes and quit smoking (currently, the probability of success in replacing cigarettes is higher). Compared with traditional Boxed cigarettes, they are cost-effective and do not contain tar and are beneficial to health.
Selling points of e-cigarettes
1. Optional aroma and intensity: Taste is the core selling point of the e-cigarette revolution. There are about 7000 types of e-cigarettes on the market
Flavors, while these flavor categories are still growing rapidly at a rate of 250 per month, far higher than any cigarette flavor previously launched by traditional tobacco companies. The colorful rainbow-like aroma has become the main driving force for the growth of e-cigarette sales, allowing them to stand out among the boring and rigid traditional cigarettes.
2. Community: Through the cooperation of Bluetooth 4.0 technology and APP, the third generation of e-cigarettes can already realize the historical memory of smoking
/Smoking control/Health management. Environmental changes determine corporate changes. New technologies can allow smokers to break through geographical restrictions and enter a unique sharing group of smokers. This is equivalent to the Internetization of cigarettes, which will also benefit smokers. Providing unparalleled health care, which I think is the core direction of future technological evolution. For enterprises, they can gradually accumulate a large user base and further analyze customer psychology by obtaining feedback from smokers to help continuously improve products and provide better services. At the same time, they can also cooperate with other health service platforms to create a complete full-featured health service platform.# p#pagination title #e#
3. Healthier: No tobacco and no tar:
4. No odor: No smoke or odor.
5. More economical: Tobacco nicotine liquid is cheaper than cigarettes.
6. Non-colored teeth: teeth will not be dyed yellow.
7. Environmentally friendly: No second-hand smoke, no open flames. It will not pollute the environment and has no fire hazard.
8. It is more convenient to use.
9. Development of foreign markets
Legal prohibition is still the core factor in determining the development of e-cigarettes. In the U.S. and European markets where laws have been liberalized, e-cigarettes have achieved development beyond expectations. Its surrounding industries also experienced explosive development in 2014.

the entry of Giants
For many years, the e-cigarette industry has been growing rapidly silently. Traditional large tobacco companies initially looked down on e-cigarettes, later regarded e-cigarettes as a threat, and now they are entering the industry with great fanfare. Traditional tobacco companies see e-cigarettes more as an opportunity than no longer a threat.“” (The top three tobacco companies in the world are Philip Morris International, British American Tobacco, and Japan Tobacco)
1. Japan Tobacco has entered the tobacco substitute market by acquiring E-Lites, the UK's leading e-cigarette manufacturer. Japan Tobacco said it had agreed to acquire all outstanding shares in Zandera, E-Lites parent company.
2. British American Tobacco established a next-generation tobacco products department and actively researched and marketed e-cigarette products. Imperial Tobacco will launch its first e-cigarette brand this year to compete with its old rival British American Tobacco. The latter launched its first e-cigarette VYPE last year.
3. Altria Group, the world's largest cigarette manufacturer and Marlboro brand owner, said it will acquire e-cigarette maker Green Smoke for US$110 million.
4.2013 On November 21, 2014, global tobacco giant Philip Morris announced that the company will officially enter the e-cigarette market in the second half of 2014. Philip Morris International has invested US$680 million in Italy to build a low-risk tobacco product factory.
5.2014 On July 15, 2008, cigarette giant Renault America agreed to acquire Lorillard. The two largest tobacco companies in the United States were merged into one. Given the potential of the e-cigarette industry, both Renault and Lorillard have invested significant resources in this field. Blu eCigs is a subsidiary of Loredera Tobacco Company and specializes in the production of various e-cigarettes. According to the latest news announced on July 15, Blu eCigs will be sold to Imperial Tobacco. Renault and Lorillard will vigorously develop Renault's e-cigarette brand Vuse. In June of this year, Vuse opened 15000 stores across the United States. The flavors of Vuse brand e-cigarettes are still relatively simple, including menthol flavor and original cigarette flavor.
Surrounding industries broke out
In 2014, the surrounding industries of e-cigarettes experienced a blowout for the first time. In Europe, the first professional e-cigarette exhibition was held in VAPEXPO, France in March 2014. It is expected that there will be nearly 10 exhibitions and seminars in Europe this year. In the United States, the frequency of e-cigarette professional exhibitions is almost twice a month. Magazines and associations appeared one after another. Professional e-cigarette online websites have also emerged one after another.
Several uncertain factors about e-cigarettes
(1) Security
The safety and reliability of e-cigarettes has not yet been officially certified. Several news stories about the explosion of e-cigarettes can be found on the Internet.
(2) Health
In order to evaporate the liquid nicotine in the e-cigarette cartridge, manufacturers add propylene glycol to it, which can account for more than 90% of the liquid content in the cartridge. Experts from the German Federal Center for Health Education conducted research on e-cigarettes and found that the substance can irritate the respiratory tract and cause some acute symptoms. Although e-cigarette manufacturers claim that e-cigarettes do not contain harmful ingredients such as tar and suspended particles in cigarettes, and do not contain second-hand smoke.
Some foreign studies have also shown that the chemicals contained in e-cigarettes cause much less harm to the human body than cigarette smoke. However, some public health experts say that there is currently no very comprehensive understanding of the hazards of second-hand smoke that e-cigarettes can produce. understanding.
(3) The intensity of tax policies
Many governments have begun to formulate new tax measures, and it is unknown whether e-cigarettes can continue to maintain their relative cost-effective advantage over traditional cigarettes.
(4) Supervision
Due to the relative novelty of e-cigarette technology and some links to tobacco law and medical policy, legislation and public health surveys on e-cigarettes are inconclusive in many countries.
At present, only the United States, the United Kingdom, India, and South Korea are legal (in these legal markets, e-cigarettes have achieved tremendous development, especially in the United States and the United Kingdom).
The European Union and the United States gave e-cigarettes a term at the legal level at the end of February and April respectively. The framework of a unified formal legal framework for e-cigarettes appeared for the first time in history. The FDA's latest proposal is more relaxed than expected (requiring ingredients to be marked, not being sold to minors under the age of 18, etc.; it does not restrict the sale of flavored products, nor does it ban e-cigarette advertising and online sales), which is beneficial to the e-cigarette industry. Good.# p#pagination title #e#
The relevant commodity inspection authorities in Shenzhen have begun to formulate product standards in May, and e-cigarettes have been exported normally since 2013.
At present, my country has not formulated clear policies and measures for e-cigarette monitoring, and relevant innovation incentive policies only stay at the level of bioengineering and manufacturing processes.
The only consolation is that the State Tobacco Administration stated at the 2014 National Tobacco Work Conference: We must grasp the development trend of the international tobacco market, attach great importance to the research and development of new tobacco products such as heated non-combustible cigarettes, e-cigarettes, and mouth-cigarettes, and regard it as a strategic, overall and long-term major issue related to the sustainable development of the industry, the National Administration has established a new tobacco product leading group with the main leaders as the team leader and the leaders of each bureau as the deputy team leader to coordinate the advanced planning and system design of new cigarettes, major special projects and orderly promotion work. rdquo;
Extended investment opportunities
(1) How big is the market?
1. If we look at the penetration rate statistics: there are more than 300 million smokers in our country. Considering the current price of e-cigarettes, the consumer groups of e-cigarettes are mainly first-class cigarette consumers. Assuming that e-cigarettes account for 10% of the market share of first-class cigarettes, then e-Cigarette market capacity is nearly 30 billion yuan. However, in the future, with the advancement of technology and scale advantages leading to the decline in costs, the price of e-cigarettes will gradually fall, and the consumption level will be expanded to all smokers. If the market share is still 10%, the domestic e-cigarette market capacity is expected to reach 100 billion.
(2) How fast is the market growing?
In view of the fact that sales of e-cigarettes in my country have not yet started significantly, we refer to data from other markets.
The size of the e-cigarette market has soared from US$910 million in 2010 to US$2.5 billion in 2013. In particular, the U.S. market has the most significant growth rate, soaring from US$190 million in 2010 to US$1.2 billion in 2013. Data from the British "Daily Mail" also shows that in 2013, sales in its e-cigarette market increased significantly by 340% compared with 2012, and sales also increased from 44 million pounds in 2012 to 193 million pounds in 2013.
(3) What are the profits of the market?
Let's refer to the financial data of VAPOR, a US-listed e-cigarette company
Vapor's results report released on October 21, 2013 showed that the company's net sales in the third quarter of 2013 exceeded US$6.4 million, a year-on-year increase of US$2.6 million, or a 66.3%. The sharp increase in net sales was mainly due to the increase in sales volume, the improved product structure and the decline in average cost per unit product. At the same time, Vapor's gross profit margin increased from 35.1% in the third quarter of 2012 to the current 38.9%; operating income and net income reached US$393282 and US$280827 respectively, with a loss of US$1252086 and US$819010 respectively in the same period last year. However, what is somewhat worrying is that while the company's performance has increased, the company's cost of sales has also increased by 56% to US$4 million, up from US$2.5 million a year ago.
(4) What are the prerequisites for a market explosion?
Referring to the outbreak of the U.S. market, it depends on the following factors
1. Social and environmental factors: Consumers are increasingly concerned about their own health; smoking bans in public places; high cost of smoking; technological upgrades and social functions of e-cigarettes.
2. Policy factors: In 2012, e-cigarettes became legal commodities, becoming an important driving force for the rapid development of e-cigarettes in the United States. The State Administration of Tobacco may also consider using e-cigarettes as a supplement to traditional cigarettes and gradually liberalize the e-cigarette market. The game dominance of domestic e-cigarettes in the China market lies with the State Administration of Tobacco and various local China Tobacco companies. The State Administration of Tobacco may also adopt a licensing system to regulate the domestic e-cigarette market. (China's e-cigarette policy needs close attention)
3. Technological innovation: Technological innovation, user experience improvement, and the economics of e-cigarettes.
Choice of investment target
At present, there are 4 e-cigarette targets in the A-share market. The companies that start the first batch will gain valuable first-mover advantage. With the development of the industry, there will definitely be more and more targets in the future, and it will gradually grow into a platform worthy of financial attention. The following will only evaluate the value of the target from the aspect of e-cigarettes.