In 2019, the e-cigarette industry experienced the test of ice and fire.

domestic marketCapital quickly pushed the e-cigarette industry to the forefront, and for a time "small cigarettes" became popular all over the country. After the popularity, it also accelerated the suppression of policy protection, banning the sale of e-cigarettes through online channels.

overseas marketsIt is also a mixed blessing. Juul's success quickly ignited the e-cigarette market, but with it there were major unfavorable factors such as adolescent epidemics, e-cigarette lung disease and PMTA in the United States.

Then in 2020, an epidemic was like a snow-covered epidemic, quietly covering up all good and bad. After returning to work, new opportunities are quietly emerging. Thanks to the maturity of heating and non-burning technology and domestic policy restrictions on low-temperature flue-cured tobacco, new outlets such as "low-temperature herbal medicine" have emerged. Low-temperature herbal medicines brands have appeared at the Shenzhen Station of the 2020 IECIE Electronic Cigarette Exhibition, becoming one of the focuses of this year.

After low-temperature herbal medicine, what are the hot spots?

In addition to heating and non-burning products, are there new opportunities in the atomized steam smoke market?

Let's put this question aside for the time being and first analyze the current global market situation.

01

Closed e-cigarette oligopoly

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In 2017, American e-cigarette manufacturer Juul became famous for its laboratory's emerging alternative to traditional nicotine,"nicotine salt". Soon, the closed small cigarettes led by Juul quickly expanded the market and occupied the minds of consumers. Statistics in mid-2018 even showed that Juul accounted for 70% of sales in the U.S. small cigarette market.

Although this proportion declined after Juul's global expansion plans were suppressed, it can be seen that closed cigarettes account for a very large proportion of the global market.

Coincidentally, such a "one-sided" bias towards closed e-cigarettes is even more serious in China.

According to Nielsen research data, a world-renowned market monitoring and data analysis company, as of May 2020, among 19 new first-tier cities, RELX has accounted for 68.9% of the closed electronic atomizer market. The third quarter mental share ranking of China e-cigarette brands released by the Digital Brand List shows that Yueshi "made a breakthrough" with a mental share of 86.35%. It should be noted that the second-ranked brand has a mental share of only 2.54%.

After a fierce battle in 2019, China's e-cigarette market has become solid"oligopoly"situation. However, the oligopoly situation of one dominant company is not conducive to stable competition in the industry.

Leading brands have absolute say in upstream and channels, while other brands will face uneven distribution of industry resources, and playing is just a dead end.

In addition, leading brands have a leading role in product design. Product plagiarism, product lines are single, homogenization is serious, and even packaging design is plagiarized, which affects the extension of industry creativity.

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Open e-cigarettes "return home" craze

In Baoan, Shenzhen, where the e-cigarette industry is the most developed, many e-cigarette manufacturing giants were born between 2007 and 2014, including Zhuoyue, Aizhuo, Kikner and Simore. Among them, Simmore's revenue in 2019 exceeded 7.6 billion yuan and was listed in Hong Kong this year, becoming the first share of e-cigarettes.

The biggest feature of these companies is that their products are not sold domestically, but only sold to overseas markets, mainly the United States.The United States has long been the largest consumer of e-cigarettes, with its e-cigarette market increasing from US$6.4 billion in 2014 to US$20.7 billion in 2019 and expected to reach US$64.4 billion in 2024. Take Simmore as an example. From 2016 to 2019, the U.S. market contributed about 50% of Simmore's sales revenue.

Since 2014, e-cigarette giants such as Smore have risen one after another. There are thousands of domestic e-cigarette and accessory manufacturers, including more than 500 in Shenzhen alone, providing 90% of the world's e-cigarette production.

At the 2020 IECIE Electronic Cigarette Exhibition Shenzhen Station, there is a phenomenon that is quietly happening.Internationally renowned e-cigarette brands that have always focused on foreign trade exports, such as UWELL, Aspire, SMOK, and VOOPOO, have accelerated their deployment in China's domestic market after the epidemic. The trend of "turtle return" for open-ended e-cigarettes is surging.

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03

Why is there a craze for open-ended e-cigarettes to "return home"?

1. The product is mature and well-known overseas

Since its development in 2007, many well-known companies have experienced market tests for more than ten years. They are very mature from products to brands. They have a huge user fan base overseas and have a certain popularity in the industry. They can quickly gain the trust of China consumers and open up the domestic market.# p#pagination title #e#

2. Overseas trade is blocked

In 2020, export trade was blocked due to the epidemic. At the same time, the U.S. PMTA has also become the threshold for major brands to enter the U.S. market. Tariffs in the United States, Ukraine, Russia and other countries have increased, making e-cigarette export trade more difficult.

3. The domestic market is ripe

When the domestic online sales ban policy was promulgated, the domestic market became formal and stable. At the same time, due to the rapid expansion of enclosed e-cigarettes, China's e-cigarette consumer market has been rapidly opened up. E-cigarettes have penetrated into the public's view and are no longer a niche novelty. Domestic market awareness has matured.

4. Advanced consumer needs

As the consumer base expands, demand is becoming increasingly diversified. Although closed e-cigarettes can cultivate loyal consumers for a single brand, the switching cost of closed e-cigarettes is too high for consumers (Switching cost: refers to the increased cost when customers switch from purchasing products from one supplier to purchasing products from another supplier). At the same time, consumers 'choices for tobacco oils are also more diversified and eager to try other tobacco oils from different brands.

Open e-cigarettes may usher in a new opportunity to erupt again.

Blindly pursuing the oligopoly of closed e-cigarettes will kill the market. Only the mutual penetration of open and closed systems, tapping the advanced needs of consumers, providing diversified product categories, and meeting diversified consumer needs is the key to stabilizing the normal development of the market.