Smoking Is Harmful, So Why Does the E-Cigarette Market Keep Growing?

According to data from the Oriental Tobacco Report and Heng Bingquan's "2022 World Tobacco Development Report", global e-cigarette sales have rebounded, with a year-on-year growth of 20.0% in 2022, reaching $23.65 billion. By category, open-system e-cigarettes and e-liquids grew by 8.1% to $8.72 billion, while closed-system e-cigarettes grew by 28.2% to $14.93 billion, with disposable e-cigarette sales reaching $2.55 billion, nearly doubling year-on-year. In terms of market, the United States ($9.0 billion), the United Kingdom ($5.03 billion), and Canada ($1.98 billion) are the top three markets globally.

According to customs data, e-cigarette exports grew rapidly in the first half of this year, with a slight decline in June. In 2022, the total export value of e-cigarettes and similar personal vaporizing devices and other nicotine-containing non-combustible products was $9.886 billion, while in the first half of 2023, exports reached $5.482 billion, a year-on-year increase of 29.16%, with June exports at $942 million, a year-on-year increase of 10.38%, but a month-on-month decrease of 6.66%.

Currently, China's e-cigarette market has formed a highly complete e-cigarette industry chain centered in Guangdong. In recent years, with the gradual rise of e-cigarettes globally, the export volume of China's e-cigarette industry has rapidly increased, and trade volume has continuously expanded.

Global e-cigarette market size: Foreign regions account for most of the sales

From a production perspective, China produces over 95% of the world's e-cigarettes, with 90% for export and only about 5% for domestic sales, indicating that the domestic consumption market remains relatively small.

Market size approaching 20 billion yuan

With continuous technological advancements and an expanding audience for e-cigarettes, e-cigarette products are emerging one after another, keeping the market size of China's e-cigarette industry in a state of rapid growth. Data shows that in 2021, China's e-cigarette retail sales were approximately 19.7 billion yuan, a year-on-year increase of 36%.

Chart 2: China's e-cigarette market size from 2020 to 2021 (unit: billion yuan)

China is a major e-cigarette exporting country

Compared to the global market size of $80 billion, China's e-cigarette consumption market is still relatively small. The large overseas e-cigarette consumption market has driven domestic e-cigarette production and exports, with about 90% of China's e-cigarettes used for export. Data shows that in 2021, China's e-cigarette industry exported approximately 138.3 billion yuan, a year-on-year increase of 180%. This export scale is expected to continue to grow, reaching 340.2 billion yuan by 2024.

Chart 3: China's e-cigarette export scale from 2020 to 2024 (unit: billion yuan)

China Securities Journal states that the outlook for China's e-cigarette export industry is broad, and it is expected to continue to maintain rapid growth in the coming years. This is due to the still large global market demand for e-cigarettes, and China, as a major e-cigarette producing country, possesses first-class manufacturing capabilities and cost advantages.

China Galaxy Securities also believes that Chinese e-cigarette companies are gradually enhancing their competitiveness in the international market, with export scale and market share expected to continue to expand.

CITIC Securities states that China's e-cigarette export industry benefits from the growth of the global e-cigarette market, and Chinese e-cigarette companies have competitive advantages in technology research and development, production capacity, and cost control, making it likely for them to occupy a place in the global market.