After Breaking Away from E-Cigarettes, Herbal Vaping May Become the Next Growth Trend

Herbal vaping is breaking away from e-cigarettes.

With the release of new regulatory drafts that clearly define the product nature of e-cigarettes, the once overlooked herbal vaping industry is now experiencing a turning point.

The new regulatory draft explicitly states:
"Products similar to e-cigarettes that do not contain nicotine or are not intended to deliver nicotine should not be labeled as e-cigarettes and must clearly indicate on the packaging 'This product does not contain nicotine' or 'This product is not intended to deliver nicotine.'

In other words, as long as herbal vaping products that do not contain nicotine are labeled as 'nicotine-free,' they do not fall under the category of e-cigarettes and are not subject to regulatory oversight. Rather than dancing with shackles, it is better to forge a new path. Consequently, many industry practitioners are beginning to shift their focus to the broader electronic vaping field.

Without discussing the tax costs and channel advantages of herbal vaping, can it penetrate new consumer markets and open up new opportunities?

Why can herbal vaping enter the new consumer track?

The concept of new consumption may seem like a gimmick to industry practitioners. In reality, the 'new' in new consumption is not limited to consumption models like live-streaming e-commerce and private domain sales, but also includes innovations in consumer concepts, demographics, and sources of consumer goods.

According to the '2021 China New Consumption Market Insight Report' jointly researched by the well-known management consulting firm BGC and Xiaohongshu, new consumption is concentrated in six major categories: beauty and personal care, food and beverages, daily necessities, maternal and infant products, small home appliances, and clothing and accessories. Herbal vaping, free from the e-cigarette label, is likely to become the seventh category.

This is because herbal vaping possesses multiple attributes: it can be absorbed by the human body, it is portable for daily use, and it also has decorative and self-expression qualities.

Since herbal vaping can enter the new consumer track, what does its future look like?

A good example is the food and beverage category, which can also be absorbed by the human body. We often see products like sparkling water, coffee, and protein bars in promotions; these were existing consumer goods, but these brands successfully occupied a place in the new consumption market by improving the substances and methods of human intake.

Existing consumer goods have already educated consumers and the market, and under the strong promotion of certain consumer goods, they successfully captured user minds through innovations in the process, forming new consumption methods that solidified into lifestyles.

A particularly relevant example is the San Dun Ban coffee, which had many coffee shops educate users in a tea culture-dominant domestic market, and with micro-innovations like freeze-dried instant coffee, it achieved great success, ranking first in coffee sales during this year's Tmall Double Eleven.

In contrast, herbal vaping, after breaking away from the e-cigarette label, still enjoys a relatively mature market and user base cultivated by the e-cigarette industry over the past few years. Moreover, its method of intake and substances differ significantly from ordinary food and beverages, meaning it will not struggle due to late entry; instead, it faces a blue ocean.

Furthermore, herbal vaping has advantages that other new consumer categories do not possess.

Technical reserves and safety awareness

In the past year, if industry practitioners were to summarize the buzzwords in the e-cigarette industry, the term 'involution' would surely be included.

The small size of the domestic market intensifies industry competition, while overseas expansion faces numerous challenges, resulting in an involuted industry landscape. Under fierce competition, all levels of the industry are seeking competitive advantages, with technology being the most recognized by practitioners.

Herbal vaping relies on the e-cigarette industry's supply chain, with ample technical reserves in atomization cores, liquids, and devices, and it continues to maintain technological advancements and iterations.

For example, the well-known FEELM ceramic core, according to Smoore's semi-annual report this year, shows that as of June 31, the company has established seven research institutes globally involved in different basic research fields, with over 160 new R&D personnel. The company's R&D expenditure in the first half of the year was 236 million yuan, an increase of about 13.1% compared to the same period last year.

As a leader in the ceramic core industry, continuous investment in technology R&D is necessary to deepen its competitive moat, indicating a clear technological orientation in the electronic vaping industry.

Additionally, due to the nature of e-cigarettes, the electronic vaping industry often possesses a strong safety awareness. Over the years of e-cigarette development, the public opinion environment, regulatory intensity, and industry 'involution' competition have prompted upstream supply chains to enhance product quality and safety measures.

A typical example is in the production phase, where upstream supply chains often transform production workshops into GMP Class 100,000 cleanrooms, meaning that their production processes strictly adhere to pharmaceutical production quality management standards.

In summary, herbal vaping not only has the capability to enter the new consumer track but also possesses certain technological industry advantages, provided that it is decoupled from e-cigarettes.

In the coming months, the industrial chain and channels for herbal vaping will gradually take shape, and other industry giants will also enter the field, marking the beginning of the 'involution' of herbal vaping in the new consumer track.