Are Well-Known Mobile Accessory Manufacturers Now Focusing on E-Cigarettes?

This change prompts us to consider where the incremental market for e-cigarettes overseas lies.

Have you noticed that under the global industrialization backdrop of e-cigarettes, many countries around the world have started to engage in "cross-industry" ventures in e-cigarettes!

Recently, "New Vapor Forces" received news from overseas that the well-known South Korean mobile accessory manufacturer ELENTEC will focus on developing its e-cigarette business, with its e-cigarette revenue accounting for over 30% of the company's income last year.

It is also estimated that in 2023, this will grow by 10% to 319.3 billion won (approximately 1.7 billion yuan), higher than the 1.53 billion yuan revenue in 2022!

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Data shows that due to a decline in revenue and profits, the well-known South Korean mobile accessory manufacturer ELENTEC is transforming its new businesses, such as e-cigarettes and home energy storage systems (ESS), into major income sources to achieve profit growth.

(The growth of its cross-industry e-cigarette business)

It is reported that Elentec is a South Korean company that produces mobile batteries, phone cases, and other accessories.

Upon closer inspection, although its main business (smartphone case business) has stagnated, it has achieved good results in new businesses such as heated tobacco devices, gaining a "new growth point"! In 2020, it transformed to produce heated tobacco devices and signed a supply contract worth 369.3 billion won (2.8 billion USD) with KT&G. On the day of signing, Elentec's stock price soared to nearly 25,000 won (19.3 USD).

Data also shows that in Elentec's 2022 product sales, phone cases accounted for 33%, e-cigarettes accounted for 31%, and battery packs accounted for 17%. The year 2022 marked a turning point for this company, as the full launch of e-cigarettes and home ESS business led to an increase in sales proportion, and it is expected that in 2023, new businesses will become the main source of income and achieve revenue growth.

For a company with over 5 billion in annual revenue, e-cigarettes also account for over 1 billion, indicating that the e-cigarette market has a good revenue potential, and this income is something many professional e-cigarette companies in China cannot match with annual sales exceeding 1 billion. In fact, in recent years, the mobile phone sales market has seen a significant decline, and the demand for accessories has decreased sharply, making e-cigarettes, which can rival new retail fast-moving consumer goods, stand out as a major focus in global retail.

What is even more noteworthy is that compared to "cross-industry" manufacturing, "cross-industry" channels have also emerged in various countries overseas!

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In China, as early as 2019, many entrepreneurs have emerged who have transformed into e-cigarettes through "cross-industry" ventures. This cross-industry transformation is not limited to brand transformation, manufacturing transformation, but also channel transformation.

For example, in the 3C digital industry, practitioners in mobile phones, smart hardware, and smart home appliances have entered the e-cigarette terminal sales with relatively high-quality retail channel resources.

However, this trend in the domestic market has become more rational with the establishment of licensing thresholds and market reshuffling.

But this trend is currently rising overseas.

With the global acceptance of e-cigarettes, e-cigarette products have shifted from large vapor, cartridge-switching to more convenient and affordable disposable products, gradually attracting more incremental users. Thus, e-cigarettes, especially in some European and American countries, have become a global consumer product.

This mass consumer product also stimulates the transformation of retail channels, with many retailers venturing into the e-cigarette business.

Current statistics show that in the UK market, e-cigarettes are sold not only in specialized e-cigarette stores but also through many "cross-industry incremental" channels, such as traditional retail chains, gas stations, beverage trade, fast-moving consumer goods trade, 3C digital, and government procurement. These "cross-industry incremental" channels are not only new incremental markets for e-cigarette sales but also key channels that can quickly boost sales through mainstream fast-moving consumer goods channels, reaching more users.

Compared to traditional stock channels (such as local brand merchants, traders, channel merchants, wholesale, and terminals), "cross-industry incremental" channels will bring new e-cigarette incremental market business to many Chinese companies going abroad, creating "new growth points" for performance!

Data from the UK also shows that e-cigarette retail has become the fastest-growing industry in the UK in nearly 20 years, making a significant economic contribution to the retail sector.