Under the disposable ban, has SMOORE’s strategic positioning missed the mark again?

  The UK Prime Minister announced a ban on disposable e-cigarettes, which poses a shock to the Chinese supply chain. SMOORE previously collaborated with UK brands to launch compliant high puff disposable e-cigarettes, but the UK ban may affect its business. SMOORE's FEELM 2.0 technology may find space in the EU market, but it will still be affected by regulatory fluctuations in the future.<\/p>

Statement:<\/p>

[1] This article is limited to research on the global vaping industry and does not involve any brand or product recommendations.<\/p>

[2] This article is for reference only in the development of the global vaping industry and does not involve any capital market evaluations or investment advice. This article should not be used as a basis for any investment.<\/p>

[3] The scope of this discussion is limited to the commercial field and does not involve any comments on regulatory policies.<\/p>

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【Two Supremes Original】 On January 29, UK Prime Minister Rishi Sunak announced plans to ban the sale of disposable e-cigarettes to prevent children from using them and reiterated the government's intention to introduce legislation to prevent the younger generation from purchasing tobacco.<\/p>

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This is the first country to announce a ban on disposable e-cigarettes in 2024, and since the UK is a major source country for disposable e-cigarettes, the ban will change the supply-demand relationship, sending a “chill” from the target market to the manufacturers in the supply chain.<\/p>

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SMOORE Misses the Mark Again<\/strong><\/h3>

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Just days before this announcement, SMOORE announced its collaboration with the disposable e-cigarette brand XJOY Bar to launch a disposable e-cigarette in the UK, with the main selling point being “2ml can be puffed over 1000 times.” Although SMOORE did not explicitly mention the technology used in the related description, it highly aligns with the introduction of FEELM 2.0 technology.<\/p>

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 XJOY Bar 1000 product｜Image source: XJOY<\/p>

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SMOORE clearly has high expectations for FEELM 2.0. Looking back at 2023, SMOORE announced the iteration of FEELM technology six months apart, once in mid-year and once at the end of the year.<\/p>

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Disposable e-cigarettes have been an important growth point for its revenue in recent years. The mid-year report for 2023 mentioned, “In the second half of 2023, we will launch more differentiated disposable innovative products in overseas markets to drive the company's revenue growth.” However, whether this vision can be realized in 2024 is now questionable.<\/p>

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In the UK market, SMOORE will soon enter a category transition phase along with many domestic disposable brands. As a technical solution under its brand, FEELM can transition from disposable e-cigarettes to open or pod-based products, but it may be constrained by pressure from brand partners in the short term.<\/p>

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However, the UK e-cigarette standards actually stem from the EU's TPD, and in EU countries that have not implemented a ban on disposable e-cigarettes, FEELM 2.0 technology still has considerable room for development.<\/p>

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Therefore, the future question is whether EU countries will impose a ban on disposable e-cigarettes or prohibit disposable products in the latest TPD. Apart from France, which is known to be advancing a ban on disposable e-cigarettes, Germany and other EU countries have not completely worsened their stance on disposable e-cigarettes.<\/p>

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However, based on SMOORE's follow-up strategy, after the announcement of the ban, it will quickly launch new products or technologies to adapt to the market. With continued financial and technical support, SMOORE will only experience a brief setback.<\/p>

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Can SMOORE Gain Its “Home Advantage”?<\/strong><\/h3>

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But when disposable e-cigarettes are banned in the UK and growth faces challenges, SMOORE still has pod-based and open e-cigarettes as market-filling products, which may become its “home advantage.”<\/p>

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Can it gain its “home advantage”?<\/p>

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Currently, SMOORE's businesses have not shown significant growth in the short term.<\/p>

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The pod-based business has encountered “setbacks” both domestically and internationally. In the world's largest market, the United States, the presence of disposable e-cigarettes has negatively impacted the sales of its pod-based products to customers. In the first half of 2023, it achieved revenue of approximately 2 billion RMB, a year-on-year increase of 27.7%; however, in the mainland China market, due to the complete ban on non-tobacco flavors, its revenue was approximately 62.08 million RMB, a year-on-year decrease of 96.3%, accounting for only 1.2% of total revenue.<\/p>

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SMOORE has had the open e-cigarette brand VAPORESSO for many years, and this year at the Dubai vaping exhibition, it showcased two open products—VAPORESSO COSS and VAPORESSO ECO NANO. SMOORE stated, “VAPORESSO COSS breaks the traditional classification of open, disposable, and pod-based e-cigarettes, belonging to an innovative fourth category that breaks the mold.” <\/p>

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 VAPORESSO COSS product sample｜Image source: VAPORESSO <\/p>

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SMOORE's mid-year report for 2023 mentioned that the open e-cigarette business achieved revenue of 640 million RMB for retail customers, a year-on-year increase of 15.8%. This is also the smallest revenue segment among SMOORE's three e-cigarette categories, failing to achieve the expected growth.<\/p>

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The current situation is that the open segment has a small audience, and the pod-based products are too tied to existing major clients, while the market is facing the “onslaught” of illegal disposable products. After losing the growth engine of disposables, SMOORE's future is more uncertain.<\/p>

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SMOORE had previously focused on pod-based e-cigarette products, missing the explosive period of disposable e-cigarettes. Just as it decided to invest in disposables and was starting to see some progress, the UK market's ban on disposables may mean that SMOORE's future layout could miss the mark again.<\/p>