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In the first half of 2023, China's exports of disposable e-cigarettes to the United States reached $1.1 billion, but the average price continued to decline, indicating a compression of profit margins.

The U.S. e-cigarette market is highly competitive and faces multiple pressures, including economic slowdown and tightening regulations. Many e-cigarette companies reported declines in performance in the first half of the year, and export volumes also fell. Industry experts indicate that supply chain profits are being halved, raising concerns about the outlook for the U.S. e-cigarette market.

Specifically, from January to June, China's exports of disposable e-cigarettes accounted for 74% of total e-cigarette exports, but the average price of disposable e-cigarette products dropped from $45.84 per kilogram at the beginning of the year to $39.18 per kilogram in June. This price decline indicates a compression of profit margins. The trend of declining average prices suggests that profit margins are being squeezed, and the U.S. e-cigarette market is not as attractive as many might think.

The intense market competition and the unabsorbed export volume in the first half of the year have led to a surplus in supply. A notable characteristic of the current U.S. e-cigarette market is the limited profit margins, with most profits being captured by distributors. In today's U.S. market, e-cigarette companies not only compete with peers but also face competition from traditional tobacco companies, putting significant pressure on e-cigarette brands. Smaller brands must contend not only with traditional tobacco companies but also with the squeeze from intermediaries.

The sales terminals for disposable e-cigarettes in the U.S. market are already saturated. Product supply is no longer an issue, but the overall demand has slowed, compounded by recent increases in oil prices, which have squeezed consumption of recreational products. Stricter regulatory policies have also intensified economic pressures in the industry, further squeezing profit margins.

Statistics show that there are currently over 9,000 types of e-cigarette devices sold in the U.S., with nearly 6,000 of them being disposable products. Since March 2023, due to the U.S. Food and Drug Administration (FDA) tightening regulatory policies, some previously popular e-cigarette brands have been removed from the market. For new brands, entering the market has become increasingly difficult, especially in the world's largest e-cigarette market.

In August of this year, many listed e-cigarette companies and e-cigarette accessory companies released their performance reports for the first half of 2023. From these reports, four companies reported significant declines in net profits from their e-cigarette businesses compared to the previous year.

Meanwhile, according to data released by the General Administration of Customs of China, China's e-cigarette export value has declined for three consecutive months since April. Additionally, the average export price of Chinese e-cigarettes in July dropped by 27.37% year-on-year. Since February of this year, the export price of e-cigarettes has been on a downward trend, with an average monthly decline of over 4%.

The U.S. e-cigarette market is facing challenges such as compressed profit margins, slowing demand, economic downturn, and tightening regulations. Industry experts believe that the market outlook is concerning, and export brands need to adopt innovative and strategic measures to adapt to market changes and maintain competitiveness.