The Spark Between RELX's Xiaojinzhi and CIGOO in a Cross-Category Comparison

Background: The IECIE International E-Cigarette Expo took place from December 6 to December 8, 2021. On November 26, the revision of the Tobacco Monopoly Law was approved by the State Council, followed by a series of new regulations from the Tobacco Administration. The timing of this year's IECIE was postponed from early September due to the pandemic, not intentionally by the organizers, and the introduction of new policies for e-cigarettes was merely coincidental. This coincidental timing led to an interesting situation, which we will discuss later.

We have already produced a video about IECIE; if you're interested, you can check it out. Today, we will discuss content not covered in that video.

This year's IECIE had a large number of exhibitors, whether in the vaping electronic cigarette halls or the heated non-combustion halls. As someone who has attended many e-cigarette expos, I feel that the experience over the past few years has been quite similar—there's not much novelty, with booths filled with handsome men and beautiful women, and various exhibitors offering similar products. If I weren't an industry insider, I would feel that attending once is enough; there's no need to go every year.

This year, due to the pandemic and policy changes, my expectations for the expo were relatively low. RELX had prepared to launch new flavors, but due to the new regulations, they were not allowed to release new products until the details were finalized. So, they had to cancel their plans, and I believe other manufacturers faced similar situations. However, there was a significant surprise at this year's IECIE: RELX.

Xiaojinzhi:

The RELX booth was the busiest at the entire IECIE expo, primarily because RELX launched the new Xiaojinzhi product, which greatly excited both industry professionals and consumers attending the expo. Every time I visited the RELX booth, the Xiaojinzhi area was surrounded by people.

What is Xiaojinzhi? Let me briefly introduce it. The details can be found on RELX's website. It consists of a special flavorless e-liquid designed for RELX, combined with RELX's fourth and fifth-generation heaters, along with a fragrance stick. These three components make up the complete Xiaojinzhi product. The e-liquid is specifically for Xiaojinzhi and contains no flavor; the flavor comes from the fragrance stick.

This form might seem a bit unconventional; it doesn't resemble traditional vaping devices or heated non-combustion e-cigarettes. I personally believe that the launch of this product is of epoch-making significance for RELX. Before this product, RELX did not differ from thousands of other vaping brands, as most products were made by OEMs like Smoore, New Wulun, and Jinjia. Each brand purchased or customized products based on their sales capabilities and needs, making it difficult to create significant differentiation. We have analyzed these details in other videos, so I won't elaborate further here. However, the launch of Xiaojinzhi immediately set RELX apart from all other vaping brands.

During this IECIE expo, RELX had two major surprises: one was its own new product, and the other was Xiaojinzhi. Xiaojinzhi was co-developed by RELX and Smoore, with Smoore handling the manufacturing. However, due to confidentiality agreements, Smoore could not disclose this information until IECIE. This is also the second point I mentioned in the previous IECIE video, where I couldn't discuss Smoore's two surprises.

Product Analysis:

As mentioned earlier, the e-liquid for Xiaojinzhi is flavorless, and the taste is primarily delivered through the fragrance stick, which resembles a heated non-combustion pod. This product form is precisely in Smoore's area of expertise, as they have a wealth of technical knowledge and patents in the solid-state e-cigarette field. Therefore, the collaboration between the two parties allowed them to develop this product from concept to testing to mass production in just over six months. The popularity of RELX's booth at IECIE was not only due to the innovative product form but also because the fragrance stick provided a better taste experience.

In the draft of the new national standards for e-cigarettes, we see that to reduce the addictive nature of e-cigarettes, the new standards require manufacturers to lower the nicotine concentration to below 20mg per milliliter, which is 2%. Currently, most vaping devices have a nicotine content of around 3%. Reducing it by a third will significantly impact the taste compared to now. The combustion and aroma release of solid-state e-cigarettes will greatly enhance the flavor at the same nicotine level. This innovation from RELX and Smoore has significantly differentiated them from other manufacturers and greatly enhanced their competitiveness.

Market Analysis:

Now, back to Xiaojinzhi. I believe RELX has truly differentiated itself from thousands of other vaping brands starting today. You might say other brands can quickly follow suit, but that’s not the case. Let's not even discuss whether other manufacturers can quickly find solutions for R&D and production partnerships. The interesting timing I mentioned at the beginning is crucial here. RELX planned to launch the Xiaojinzhi product at IECIE and had already obtained market approval, but subsequent regulations required all e-cigarette manufacturers to refrain from launching new products until the new regulations were finalized. This inadvertently gave RELX a natural time advantage. I believe RELX could not have known the details of the new regulations in advance, but this coincidence provided them with a near-vacuum market protection period.

In recent years, RELX has been the undisputed leader in the e-liquid vaping market, known for its terrifying market share and consumer mindshare. In any statistical measure, they occupy over two-thirds of the market share. However, all industry insiders know that the e-cigarette industry is still filled with uncertainties, and the entire industry is just beginning. Creating greater differentiation in product forms and consumer perceptions compared to other vaping brands is the only way to maintain industry leadership.

It is foreseeable that for a considerable time in the future, the cross-category product form of Xiaojinzhi will be exclusive to RELX. For Smoore, although they have established a leading position in the heated non-combustion field over the past couple of years, they have yet to achieve a similar status in the vaping industry as RELX. This strong collaboration, backed by a leading industry player, will deepen the understanding of Smoore's R&D capabilities among new tobacco industry practitioners and end consumers.

Conclusion:

Today, we briefly introduced the collaboration between RELX's Xiaojinzhi and Smoore, along with a simple prediction and analysis of Xiaojinzhi's positioning and the industry. We won't delve deeper for now, as that is the job of industry media.

How Xiaojinzhi was developed, its technical characteristics, how Smoore's engineers positioned this product, and the interesting stories behind the R&D and joint production will be detailed in future videos if there is interest.