How Long Can E-Cigarettes Stay Hot? How Much Longer Will the Industry Boom Last? Let’s Look at the M

As people's awareness of health increases and smoking control measures intensify, e-cigarettes are becoming increasingly popular and favored, transitioning from a niche product to one that is widely recognized, even impacting the traditional tobacco industry.

Data shows that by 2017, China's e-cigarette production reached 1.651 billion units, a year-on-year increase of 37%. Most e-cigarette products or their accessories are produced in China, especially in Shenzhen, which manufactures about 95% of the world's e-cigarettes. However, 90% of these e-cigarettes are exported, with the United States being the largest export market.

Many businesses and advocates believe that e-cigarettes can solve smokers' health issues and the dangers of secondhand smoke, but the effectiveness of e-cigarettes for smoking cessation has always been controversial.

Today, e-cigarettes are no longer just seen as smoking cessation products; their use is increasingly regarded as a trend and a culture.

The e-cigarette industry is developing rapidly.

Everyone knows that smoking is harmful to health, and many people have tried to quit.

As an electronic product that mimics cigarettes, e-cigarettes use methods such as atomization to turn nicotine and other substances into vapor for users to inhale, resembling the appearance, smoke, taste, and sensation of traditional cigarettes.

A survey shows that the global e-cigarette industry market size grew from $2 billion in 2012 to $8 billion in 2015, reaching $10 billion in 2016, with an average annual compound growth rate of 49.5%. In 2011, China's e-cigarette production was about 111 million units, and by 2017, it reached 1.651 billion units, with an average annual compound growth rate of 71.6%.

Currently, the supply and demand pattern of e-cigarettes at home and abroad is stable, with Europe and the United States being the main markets, while the e-cigarette market in some Asian countries is also developing rapidly. Nearly 90% of e-cigarettes and their accessories are produced in China, with thousands of domestic e-cigarette and accessory companies.

Abroad, as the consumption market for e-cigarettes rapidly expands in countries like the US and Europe, international tobacco giants such as British American Tobacco, Imperial Brands, Lorillard Tobacco, Reynolds American, and Philip Morris USA have all entered the e-cigarette market, leading to an increase in industry concentration.

After more than a decade of development, the e-cigarette industry, as a type of electronic consumer product, has gradually begun to exhibit characteristics of fast-moving consumer goods, especially with the rise of the "health" concept in consumer products. The consumer group for e-cigarettes has evolved not only from traditional smokers but also includes a significant number of young people who are keen on chasing trends.

On Taobao, searching for "e-cigarettes" yields thousands of related products, categorized as "smoking cessation products." On JD.com, the prices of e-cigarettes range from dozens to thousands of yuan, with one brand priced at 368 yuan receiving over 70,000 consumer reviews.

A Shenzhen-based manufacturer specializing in exporting e-cigarettes told reporters that domestic e-cigarette consumers mainly aim to quit smoking, while many foreign consumers view vaping as a fashion statement for fun. This has led to a significant market disparity, with Shenzhen's e-cigarette products primarily intended for export.

How long will the industry boom last?

Since the signing of the international tobacco control treaty, governments worldwide have restricted the development of the tobacco industry, significantly slowing the growth of the global tobacco sector, with some years even experiencing negative growth. In this context, tobacco giants are attempting to develop new technologies and products to reverse the trend, with reduced-harm new tobacco products emerging, among which e-cigarettes are one of the most significant.

As major cities in China successively implement smoking bans—prohibiting smoking in public places—the demand for alternatives has promoted the development of simulation small cigarettes. It is generally believed that the harm of e-cigarettes is less than that of traditional tobacco. Online, most businesses promote "smoking cessation" as the selling point of e-cigarettes, and many still view them as a means to quit smoking.#p#分页标题#e#

Industry insiders believe that the e-cigarette industry has favorable long-term development prospects. On one hand, e-cigarettes serve as a substitute for cigarettes, offering smoke, taste, and sensation similar to traditional cigarettes, with significantly reduced levels of tar, carbon monoxide, nitrous oxide, and other toxic substances, making them a good alternative to traditional cigarettes. On the other hand, while global cigarette production is slowly declining, the e-cigarette segment is experiencing high growth.

A research report from a securities company analyzes that China currently has over 300 million smokers, and conservatively estimates that by 2020, if 10% of smokers are willing to accept e-cigarettes, the annual equivalent consumption of e-cigarettes could exceed 7 billion units, leading to a market size of over 100 billion yuan.

It is worth mentioning that with technological advancements, many domestic e-cigarette companies have begun to innovate in appearance, fashionable colors, safe temperatures, and pleasant tastes to stimulate new consumer demand. On Taobao's Tmall store, some e-cigarettes focus on design innovation, adding many fashionable elements. Some e-cigarettes are designed in various shapes, making them fun; while others increasingly incorporate technological elements, with the latest e-cigarette products resembling smart terminals, operating with control boards and chips, and even having their own software.

However, it is important to note that the World Health Organization has never considered e-cigarettes a legitimate nicotine replacement product to help smokers quit. Additionally, developed countries such as the UK, the US, and France currently hold a conservative attitude towards the efficacy of e-cigarettes, and legislation and health investigations regarding e-cigarettes have yet to reach a conclusion.

Public information shows that e-cigarettes are often used by patients with mental illnesses abroad, as doctors typically cannot intervene in smoking cessation behaviors for this group, fearing that quitting may exacerbate anxiety and depression.

In addition to policy uncertainties, taxation is also an issue for industry development. The traditional tobacco industry is the largest tax-generating industry, accounting for 6% to 7% of national fiscal revenue, with a gross profit margin as high as 70%. Whether e-cigarettes can fill the gap in tax revenue and profits after large-scale substitution remains to be seen.

E-cigarette market regulation still has "gray areas".

Regarding the attributes of e-cigarettes, China does not have a clear legal definition, and regulation of e-cigarettes lacks clear institutional norms, resulting in significant legal gaps. From a production standpoint, e-cigarettes use e-liquids containing nicotine and other flavors, which have similarities to tobacco and a certain level of addictiveness.

Professor Xiao Dan, director of the Tobacco Disease and Smoking Cessation Center at the Respiratory Center of the China-Japan Friendship Hospital, pointed out that although theoretically, the harm of e-cigarettes should be slightly less than that of regular cigarettes, they still contain nicotine, which is highly addictive and creates dependency. Relying solely on e-cigarettes to quit smoking has a very low success rate in the current environment.

However, there has always been controversy over whether e-cigarettes are smoking cessation products or simply new tobacco products with more flavors, both in China and globally.

According to China's Tobacco Monopoly Law, tobacco monopoly products only include cigarettes, cigars, tobacco leaves, rolling paper, etc., and e-cigarettes are not included. This means that most e-cigarettes are still in a "three no" state of no product standards, no quality supervision, and no safety evaluation.

In the capital market, some e-cigarette companies have seen rapid growth in performance but have not received much attention from capital, which reflects the current predicament of insufficient standards and unclear regulatory policies in the e-cigarette industry.

This has also led to low entry barriers in the e-cigarette industry, with varying quality, and some businesses even targeting the youth demographic, leading to the emergence of some "fruit-flavored" e-cigarettes.

Currently, there are thousands of domestic e-cigarette and accessory companies, with a fragmented industry structure. Major companies include YQ Technology, Shunhao Co., Jinjia Co., Dongfeng Co., McWell, and IVPS. However, apart from these large companies with complete industrial chains that use advanced production technology and have quality and brand advantages, most companies are still limited by factors such as scale, capital control, product development, production processes, quality control, management experience, and channel services, resulting in small production scales and concerning product quality.

Industry insiders say that the biggest problem in the domestic e-cigarette market is the positioning of e-cigarettes. In China, e-cigarettes are neither classified as drugs, nor health products, nor medical devices, nor tobacco monopoly products, leading to regulatory blind spots.

Although the positioning and regulatory policies are not very clear, the market still holds high hopes for the domestic e-cigarette market. Industry insiders generally believe that as channels deepen and broaden, and as companies expand in scale, the production capacity and output of the e-cigarette industry will further increase. Especially in recent years, tobacco giants and leading companies in related industries have continuously entered the market through mergers and acquisitions, leading to an increase in industry concentration.

In Shenzhen, leveraging the advantages of the electronics and foreign trade industrial chain, about 90% of the world's e-cigarettes are produced here. As a global e-cigarette industry hub, the first domestic e-cigarette industry association was officially established last year. At the beginning of this year, this association released two group standards: "General Specifications for E-cigarette Atomization Devices" and "Specifications for E-cigarette E-liquids," which are considered to fill the gap in e-cigarette industry standards and help the domestic e-cigarette industry enter a standardized development phase.

How long can e-cigarettes remain popular? It remains to be seen. There are voices suggesting that future regulatory standardization is imperative.

Original title: How long can e-cigarettes remain popular?