E-cigarettes are a special category of consumer products. In 2022, China issued new standards that explicitly banned the sale of fruit cigarettes. In the same year, e-cigarettes began to be taxed the same as tobacco. The industry ecology was changed overnight. RELX's parent company, RELX Technology, which once " monopolized " the e-cigarette market with a 74% market share and was known as the " first e-cigarette stock ", saw its stock price fall by as much as 95% in the first half of 2023. Going overseas has become a must for e-cigarette brands. In 2021, e-cigarette exports surged, with export value increasing by 180% year-on-year. According to data from the General Administration of Customs of China, by 2022, the total export value of Chinese e-cigarette products will reach 66.286 billion yuan, and in 2023, the total export value will reach 77.954 billion yuan, a year-on-year increase of 17.6%. Data shows that more than 95% of the world's e-cigarette production and products come from China, and 70% of them come from Shenzhen. In the mainstream national markets for e-cigarette consumption , Chinese e-cigarette brands occupy the top market share. E-cigarette brands owned by companies such as Aiqiqi, Smoore, RELX, Jier Technology, Shiyouweier, and IVPS have already firmly established themselves at the top of the e-cigarette markets in Europe, the United States, Southeast Asia and other countries. At the same time, e-cigarettes have the attributes of fast-moving consumer goods, with fast updates and iterations and strong innovation. Some people think that e-cigarettes are like " milk tea ", which can gain new growth space through innovation in appearance and flavor. With this, new brands and products can always find opportunities for differentiation . However, as a sensitive category, e-cigarettes are greatly affected by policy fluctuations . Countries are constantly adjusting their policies on e-cigarettes, and compliance issues have become a major difficulty for e-cigarettes to go overseas, followed by multiple difficulties in logistics, payment and marketing. What are the new trends in the overseas e-cigarette market? What challenges are likely to be encountered in the overseas market? Disposable e-cigarettes: From the rush to the ban Each country has different regulations and import certification requirements for e-cigarettes. Overall, Europe and the United States maintain a relatively open attitude towards e-cigarettes and are also the largest export market for e-cigarettes . According to data from Shenzhen Customs cited by Cinda Securities, in January-February 2023, the top five countries and regions with the highest e-cigarette exports from Shenzhen were the United States, the European Union, the United Kingdom, Russia, and ASEAN, accounting for 32%, 18%, 14%, 9%, and 6%, respectively. The UK and the US are well-deserved major consumer countries of e-cigarettes. According to Euromonitor data, in 2022, the global e-cigarette retail scale will be about US$18.9 billion, of which the UK's e-cigarette retail scale will be about 2.03 billion pounds (about US$2.58 billion), a year-on-year growth rate of 44%; the US e-cigarette retail sales will be about US$7.8 billion, a year-on-year decrease of 8%. In Europe and the United States, e-cigarettes are used as a tool to quit smoking. The UK is one of the countries with the most positive attitude towards e-cigarettes . In 2019, the UK set the " Smoke-Free 2030" goal, hoping to reduce the smoking rate to below 5%. In October 2021, the UK announced that e-cigarettes would be legal medical products to help smokers quit smoking. Driven by the UK, e-cigarettes have grown rapidly around the world. Electronic cigarettes are mainly divided into four types: open electronic cigarettes, cartridge-type electronic cigarettes, disposable electronic cigarettes and solid electronic cigarettes ( HNB). Open e-cigarettes are larger in size, and you can buy e-liquid to fill it yourself, which can be reused and has a low cost; cartridge-type e-cigarettes are divided into two parts: the cigarette rod and the cigarette cartridge. The cigarette cartridge needs to be replaced, and the cigarette rod is reusable and needs to be charged; disposable e-cigarettes can be discarded after the e-liquid is used up and cannot be reused. HNB is a solid e-cigarette, which uses a heater to disperse the e-liquid, but it does not burn. In the past two years, disposable e-cigarettes have experienced explosive growth and quickly squeezed the market share of open and cartridge-type e-cigarettes. Data shows that the sales of disposable e-cigarettes in the UK in 2022 increased by 1116.9% year-on-year to US$1.08 billion, and the proportion of disposable e-cigarettes increased from 0.6% in 2020 to 43.1% in 2022. In the United States, the sales share of disposable e-cigarettes also increased from 24.7% in 2020 to 51.8% in 2022. Disposable e-cigarette products are dominated by Chinese brands. Aiqiji, an e-cigarette company from Shenzhen, is the biggest winner. Aiqiji's own brands Elf Bar and Lost Mary have risen rapidly with disposable e-cigarettes, becoming the leading e-cigarette brand in the UK market and ranking first in many countries. " When people think of disposable e-cigarettes, they think of Ai Miracle. " Fifi, director of the overseas business department of the e-cigarette industry media Yi Se Guan Cao, told Yien.com. According to Statista data, Elf Bar 2023's sales in the UK exceeded 654 million pounds. According to VapeClub statistics, among the top 50 disposable e-cigarette products in the UK, Ai Miracle's two brands accounted for a total of 47 seats. Judging from brand data, the brands with higher sales of e-cigarettes in the UK in 2021 are JUUL, Blu, and Logic, and their products are mainly refillable. By 2022, the brands with the highest sales have become Elf Bar, Lost Mary, Vuse Go, Crystal Bar, and Elux, and their products are mainly disposable e-cigarettes. It is worth mentioning that JUUL and Logic are both overseas brands that are domestically manufactured, while disposable e-cigarettes are mostly Chinese brands. Compared with cartridge-type and open-type e-cigarettes, disposable e-cigarettes are cheaper and have more flavors, and they quickly replaced the market share of the former two. However, disposable e-cigarettes have always been controversial. On the one hand, there are environmental risks. Disposable e-cigarettes contain disposable plastics, nicotine and batteries, and rapid consumption can easily lead to serious environmental problems. On the other hand, they are attractive to minors, causing them to become addicted to smoking. According to British media data, in the past two years, the proportion of minors aged 11-17 using disposable e-cigarettes has increased nearly 9 times. The latest news: On January 29, 2024, the relevant departments in the UK have decided to officially ban disposable e-cigarettes. After the news was announced, the share price of Smoore International, a provider of atomization technology solutions, fell by more than 4%. The implementation of this ban will bring about a new wave of reshuffles in the e-cigarette market, and cartridge-type and open-type e-cigarettes may regain their market dominance. Fifi revealed that the brand has long been prepared for policy changes . In the UK , there have been reports that disposable e-cigarettes may be banned in 2023. In order to cope with market changes, Ai Miracle has launched replaceable cartridge products in the second half of 2023 and started selling them in Germany. From open-type to cartridge-changing, and then to disposable, electronic cigarette products are changing rapidly , which shows a characteristic of the electronic cigarette category: the product iteration cycle is fast and is greatly affected by changes in the market environment . Head companies are sensitive to market trends and can flexibly adjust product structures, while new brands can easily hit market demand and quickly increase in volume, but they also have the risk of " rapid birth and rapid death ". The triple challenge of logistics, payment and marketing As a sensitive category, compliance is a topic that e-cigarettes cannot avoid when going overseas. In recent times, mainstream countries have tended to be more stringent in regulating e-cigarettes. Taking the United States as an example, e-cigarettes need to apply for PMTA (pre-market tobacco application) to enter the market, and provide the FDA with sufficient data and test reports to prove that e-cigarette products are " suitable for protecting public health " or have tobacco substitute effects. Since 2020, the FDA has received 26 million PMTA applications, and issued marketing denial orders (MDO) for 99%, while only 23 tobacco-flavored e-cigarette products have received marketing authorization orders (MGO). However, under supervision, there are still a large number of products on sale in the US market that have not completed PMTA review. According to media reports, since 2023, the FDA has frequently issued various import alerts and warning letters to e-cigarette companies to crack down on " illegal " e-cigarettes circulating on the market. On July 27, 2023, the FDA expanded the warnings from companies to distributors and retailers, and issued warning letters to three distributors on the grounds that they sold and/or distributed a variety of e-cigarette products that did not pass PMTA, including Elf Bar/EB Design, Esco Bars and Puff Max. Among them, Elf Bar/EB Design is a brand under China's Ai Miracle. Each country has different policies on e-cigarettes. If e-cigarette companies want to operate in compliance, they need to understand the corresponding policies of each country. In addition to compliance, e-cigarette sellers will also face the triple difficulties of logistics, payment and marketing. In terms of logistics, electronic vaporizers are sensitive goods in international express delivery, and are also prohibited tobacco products. There are few express delivery channels that can handle electronic cigarettes. " Countries have strict import and export restrictions on electronic vaporizers. Some logistics companies have the ability to transport to the United States, but not to the Middle East. In this way, we need to find companies with different transportation capabilities to cooperate with. " Wendy , the marketing director of Nox Juxing, introduced to Ennet. At the payment level, many overseas banks and online platforms do not support account opening in the e-cigarette industry, and finding channels to register companies and open accounts becomes a difficulty. On the marketing level, on the one hand, e-cigarettes cannot be advertised, and most countries restrict the promotion of e-cigarettes on mainstream media platforms; on the other hand, online marketing and traffic are also severely restricted. Mainstream countries cannot advertise and can only passively attract traffic, so most e-cigarette brands go overseas with the help of independent sites, relying on search engines, social media, cooperation with Internet celebrities, alliances and other methods to obtain traffic. Taking Instagram as an example, from the data of Nox, we can see that there are thousands of Internet celebrities doing marketing for well-known brands. ( Instagram Kol Marketing Data Data source: Nox (Juxing ) Wendy introduced that the e-cigarette population has obvious labels, such as gamers, e-sports people, fashion gurus, etc., so the key to e-cigarette online marketing is to acquire high-quality users, and it is necessary to give priority to vertical circles such as high-quality Internet celebrities and vape communities in the vape (electronic cigarette) field. “Only by cooperating with vertical vapes can we quickly obtain seed users, who are the creators and transmitters of product value and can quickly break through the circle among vape users.” Wendy said. When the brand enters the mature stage, Internet celebrities in the technology, fashion, and gaming categories are all high-quality choices for e-cigarette marketing. Online, e-cigarette sales channels are mainly divided into e-cigarette collection sites and brand independent sites. There are local e-cigarette e-commerce websites in the UK and the US, such as vapeshop and vapeclub in the UK and Vaping.com in the US. Click on these websites and you can see that Chinese e-cigarette brands such as Elf Bar, Smok, Uwell, Vaporesso, and Voopoo are at the top of the brand list. Consumers can place orders on the collection websites. Take Vaping.com as an example. The website originated from an e-cigarette forum and has accumulated a large number of loyal users. Some media have reported that Vaping.com’s average monthly visits can reach 500,000. Its model is to use its own traffic to provide agency services for big brands and earn e-commerce profits. E-cigarette brands will set up independent websites to conduct online marketing and drive traffic to their offline retail. But overall, online channels do not account for a high proportion of e-cigarette sales, and offline channels are the main retail channels for e-cigarettes. Industry insiders told Ennet that the top brands in the mainstream market are basically stable, and it is difficult for new brands to grab their market share. However, small and medium-sized brands can also achieve higher shipments by relying on channel resources for ground promotion and distribution. With the market saturated, small and medium-sized brands are looking for new opportunities " Big market changes " is a characteristic of the e-cigarette market. Ben, an industry insider who helps big e-cigarette brands to act as European channel agents, told En.com that they usually make predictions based on three months of sales. For example, if a product sells 5,000 units in January, they will raise the stock to 7,000 to 8,000 units. " But after the stock is ready, there may be a new product line on the market with a better price-performance ratio or better quality and taste, so we may only be able to sell 1,000 units of this product in April ," he said. Another Shenzhen company, Qingxing Technology, has developed an e-cigarette brand with a high market share in Mexico. Nicole, the product manager of Qingxing, also expressed the same view: " In the e-cigarette industry, product iterations are very fast, and new companies with good products will emerge at any time. " In fact, e-cigarettes are more like consumer electronic products, but their technical threshold is not high. The main product differences lie in the innovation of flavor, taste, appearance, and craftsmanship. Some industry insiders compare e-cigarettes to " a smaller version of milk tea with nicotine added ". They have the characteristics of high repurchase rate and novelty. For brands that are doing well on the market, consumers will develop a habit and buy them repeatedly, but for new brands with innovative appearance, taste, and taste, consumers are also happy to try new ones. Ben's company mainly focuses on the British and French markets. He said that now the major agents in the UK and France have established stable cooperation with the leading brands, the channels are basically saturated, the leading brand structure is basically stable, and all-round barriers have been formed from the supply chain to the market, which are difficult for new brands to overcome. When the leading brands have become stable, new brands will seize the market through unique product innovations. " There are many niche brands. " Fifi introduced a case, a cyberpunk-style e-cigarette. She said that ordinary office workers may not buy this product, but it can attract specific enthusiasts. Among niche products, brands use design and innovation to attract e-cigarette consumers from different cultural circles. " There are a lot of new things I haven't seen before, and there's a surprise from time to time. " said Fifi. When big brands have become the standard and representative of e-cigarettes in the minds of consumers and become the vane of the industry, small brands have shown a trend of dividing up the market segments. At the same time, the diversity of channels and markets provides a broad living space for small and medium-sized brands. On the one hand, there is the diversity of channels. The sales channels of e-cigarettes are mainly offline. According to data from 2021, 60-80% of e-cigarette sales in Europe come from offline consumption. The offline channels mainly include e-cigarette specialty stores and various comprehensive stores. " E-cigarettes are sold in many places, such as convenience stores, gift shops, bars, cafes, and grocery stores. " Fifi said that there are a lot of " channel goods ". The Fifi team came from the domestic e-cigarette industry exhibition. They founded a magazine called " CVICVAPE " offline in Europe to report on the dynamics of the e-cigarette industry, and conduct ground promotion to expand offline small B customers and connect offline channels for new domestic brands. The second is the diversity of the market. With the mainstream markets in Europe and America basically saturated, many new brands will turn their attention to other national markets. As a consumer product, e-cigarettes have maintained a high growth momentum around the world. According to data from Strait Research, by 2030, the global e-cigarette market will reach US$93.94 billion, and will maintain a compound annual growth rate of 16.27% from 2022 to 2030. According to a report by the media Blue Whale Finance, in the British and American markets, one brand can occupy half of the market, but in emerging markets such as Southeast Asia, South America, Africa, etc., the market is growing wildly, and it is very rare for a brand to achieve a 30%-40% market share in a country. The leading brand effect in emerging markets is relatively weak, which is precisely an opportunity for small and medium-sized brands. Nicole said that the purchasing power in Mexico is not as high as that in Europe and the United States, and some innovative and advanced products are not well accepted. " Mexico's demand for products is relatively simple, and they pursue the satisfaction of taste. " Nicole believes that although there are hundreds of e-cigarette brands on the Mexican market, the difference between the products is not great, and the brand strength depends more on whether there are more channels in the local area. " It depends on whether more manpower and material resources are invested to open up the market. " She said. The market structure may change, and new products will emerge in an endless stream After the ban on disposable e-cigarettes, the e-cigarette industry will see new changes. E-cigarette brands have made flexible arrangements to cope with fierce market competition and changes. New product technologies, designs and gameplay emerge in an endless stream. In terms of product appearance, electronic cigarettes with screens have become the latest trend this year. Browsing the official websites of major brands, you can see that several major brands have successively launched electronic cigarette products with electronic screens. Uwell Smok Voopoo The screen on the exterior can display the battery level and oil level of the cigarette. Both disposable and cartridge-type electronic cigarettes have launched models with screens. "Electronic cigarettes with screens have attracted the attention of consumers in the US market and have become a new trend. New products can be said to have risen rapidly. " Nicole said. Some e-cigarette innovations have also begun to move towards high-end development. Nicole introduced that McQuay's e-cigarettes have begun to collaborate with artists to launch e-cigarettes with artistic appearance. Another industry insider said that Uwell has launched a new 18,000-puff e-cigarette for the United States and Russia. The product is very well made, with a cool design as always, a screen, and adjustable smoke mode. " This is even just a disposable e-cigarette that is thrown away after use, and the craftsmanship is so good. " said the industry insider. It can be seen that in high-consumption countries, e-cigarettes are becoming a " fashion item ". New ways to play with e-cigarettes are also emerging. Yien.com has come across an e-cigarette brand called Mist that is expected to be launched this year. This product combines e-cigarettes with blockchain gameplay. Consumers can earn points for every puff of a cigarette. When they have accumulated enough points, they can exchange them for cryptocurrencies, making money while smoking e-cigarettes. The slogan of this product is " Mining together", which means " dig together " in Chinese . " Part of the revenue from this product will be used for environmental protection charity. " Michael, the brand founder , told Ennet. It can be foreseen that the e-cigarette product ecosystem will become richer in the future, and the ecological gameplay will become more mature.
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