"But in the long run, a standardized and stable market is still worth slowly cultivating." The new regulations are very demanding for licensed enterprises at the production and manufacturing ends, which means that only powerful enterprises can continue to stay on this track, which is a good thing for the e-cigarette industry that has been fighting with nearly a thousand brands before. ”
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Beijing News reporter Sun Wenxuan edited Yue Caizhou
"Almost all the factories that make fruit flavors have stopped production, and as many goods as you want, you can sell them on a first-come, first-served basis." Recently, the staff of the magic flute electronic cigarette store told reporters.
On March 11, the State Tobacco Monopoly Administration issued the Administrative Measures for Electronic Cigarettes (hereinafter referred to as the Administrative Measures), which came into effect on May 1, 2022. Article 26 stipulates that the sale of flavored e-cigarettes other than tobacco flavors and e-cigarettes that can add atomizations by themselves is prohibited.
The new regulations for e-cigarettes are about to land, and some merchants are staging the final sprint. Many stores take this last month or so as a good time to rush, and some also create a momentum to increase prices, and the price increase is even as high as 30%.
However, with the imminent landing of new regulations, the e-cigarette industry is ushering in the pain of adjustment.
Some e-cigarette practitioners told Shell Financial Reporter, "Now the proportion of non-tobacco-flavored smoke bombs in the product is relatively large, and it needs to be adjusted in the future, and the user's reaction to the taste adjustment is not yet known." "The suspension of non-tobacco-flavored e-cigarettes such as fruit flavor, inventory clearance, and the adjustment of stores and the restructuring of products are becoming their daily routines.
At the same time, with the arrival of new regulations on the non-exclusive operation of e-cigarette retailers, some brands with more stores may face the pain of broken arms.
A number of industry experts said that for existing e-cigarette industry practitioners, they may face pain in the short term, such as user loss, store adjustment or store closure. "But in the long run, a standardized and stable market is still worth slowly cultivating." The new regulations are very demanding for licensed enterprises at the production and manufacturing ends, which means that only powerful enterprises can continue to stay on this track, which is a good thing for the e-cigarette industry that has been fighting with nearly a thousand brands before. ”
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E-cigarette "broken sweet"
Recently, Shell financial reporters visited the offline stores of electronic cigarettes in Beijing and found that many brand stores have entered the "out of stock mode", especially some best-selling fruit-flavored electronic cigarette bombs, such as mung bean flavor, taro flavor and so on. In a Yueke specialty store in a shopping mall, dozens of boxes of electronic cigarette cartridges are placed on the counter, and there are only seven or eight flavors to choose from. "After May 1st, the fruit flavor was not allowed to sell, and customers are basically hoarding goods now, and there is not much left." From the adjacent electronic cigarette mouth area for customers to try, it can be seen that there are dozens of original flavors, including old popsicles, mung bean popsicles, coffee, mojito, kumquat passion, taro ice cream and so on.
The staff of this store told reporters that most of the fruit flavors are currently out of stock, if you want to buy the taste that is not in the store now, customers need to register for payment first, and then they go to the company to ask for goods, if there is a stock, you can send a courier package mail a few days later, if there is no goods, then refund at that time.
Shell financial reporter then came to another Shega Snowplus e-cigarette store, in the store for tens of minutes, the clerk has been busy with WeChat online orders, but also from time to time customers come to try to suck and buy. "A lot of the fruit flavors are already packed up." While recording the customer's orders on WeChat, she pointed to a pile of packages on the counter on the side of the store and told reporters, "These are the goods to be sent out today." ”
It is understood that although the state issued a document as early as 2019 to prohibit merchants from selling e-cigarettes through the Internet, because the daily consumption of e-cigarette consumers is mainly cigarette bombs, almost every store will add customers who buy for the first time to the special WeChat, and the subsequent smoke bomb repurchase is carried out on WeChat, and then the store sends express delivery products.
At a YOOZ e-cigarette offline store, the reporter met Zhang Yu (pseudonym), a 33-year-old white-collar worker, who is a fruit-flavored e-cigarette enthusiast. Zhang Yu said that the fruit taste of the store near his home was not much, so he ran 16 kilometers to this store to buy.
Zheng Wei (pseudonym) is an investor who has paid attention to the e-cigarette industry and is also an e-cigarette consumer. "Personally, I'm disappointed that I won't be able to smoke fruit-flavored cigarettes in the future." He decided to reserve six months' worth of smoke bombs.
Under the enthusiasm of some consumers, some stores have taken the opportunity to increase prices. The price of cigarette bombs in a Yueke franchise store rose from 99 yuan / box to 129 yuan / box, "others did not increase the price may be because of the large number of goods, we are now left on the shelf this point." "Another YOOZ e-cigarette store clerk told reporters that there was no price increase in his store." However, I usually save some Yueke e-cigarettes, which can be sold to you for 140 yuan / box. ”
Behind the so-called rush is actually not lacking in "rendering", many stores have taken this last month or so as a good time to rush, after all, on the one hand, it can increase sales, on the other hand, there is indeed inventory to deal with. A number of brand stores issued notices in the WeChat circle of friends, announcing that "fruity taste is urgent" and calling on old customers to "hurry up and stock up".
A Leimi e-cigarette sales told reporters, "Now the sales volume is particularly large, and some manufacturers also have to produce some more." An e-cigarette brand store even gave a "hoarding strategy" in the circle of friends.
For the new regulations, there are also some consumers who are indifferent. Liu Hao (pseudonym) switched from traditional cigarettes to fruit-flavored e-cigarettes a few years ago, "If you smoke traditional cigarettes at home, the taste is too big." Paper cigarettes are also not allowed in office buildings, but e-cigarettes are. He said he wouldn't hoard goods, "if you really can't do it, quit." I didn't have to smoke and went back to smoking paper cigarettes. He has smoked tobacco-flavored e-cigarettes before, and feels that the taste is "still a bit choking", as for the tobacco-flavored e-cigarettes that may appear in the future, "it depends on whether the taste is suitable." ”
E-cigarettes bid farewell to barbaric growth,
Specialty stores or into history
▲The proportion of non-tobacco flavored smoke bombs in current electronic cigarette products is relatively large. Finishing: Beijing News shell financial reporter Sun Wenxuan
"At present, the proportion of non-tobacco-flavored smoke bombs in the product is relatively large, and it will need to be adjusted in the future, and the user's response to the taste adjustment is not yet known." Fang Hui, partner and CMO of Bode, told Shell Financial Reporter that the United States will also regulate the taste, but it also opens up the mint flavor in addition to the tobacco flavor. "The domestic control of products this time is also relatively comprehensive, disposable electronic cigarettes and heated electronic cigarettes are also included, which will have a great impact on domestic brands."
Zhao Yangbo, co-founder of e-cigarette brand RXR Shiwu, also mentioned that in the domestic market, about 90% of past users mainly buy non-tobacco e-cigarettes, "I estimate that the new regulations will cause a relatively large loss of users in stores." "There could be a massive store closure." Because if your point user base is not enough, the store will not be able to operate. In addition, "(Possibly in the future) the imposition of e-cigarette taxes will also affect the profits of specialty stores." ”
Zheng Wei, an investor who has paid attention to the e-cigarette industry, also analyzed that "this new regulation has led to a lot of SKUs for e-cigarettes, which will make it more difficult for the model of shopping mall retail stores to make profits", "Most consumers have no long-term solution, once the domestic qualitative ban on sales, it is a big deal not to buy, return to paper cigarettes or do not smoke." ”
In addition to restricting the taste of e-cigarettes, there are also some regulations in the Administrative Measures that are also worthy of attention.
Articles 8 and 11 of the Administrative Measures stipulate that the establishment of e-cigarette production enterprises (including product production, oem processing, brand holding enterprises, etc., the same below), atomization production enterprises and e-cigarette nicotine production enterprises, the initial public offering of shares and listing, as well as capital construction or technological transformation to expand production capacity, must be reviewed and approved by the competent administrative department for tobacco monopoly under the State Council.
"This means that the disorderly expansion of capital will be curbed, and a large number of capital will gradually be out of the game." Zhang Yi, CEO and chief analyst of Ai Media Consulting, said.
Article 20 of the Administrative Measures stipulates that the competent administrative department for tobacco monopoly under the State Council shall establish a unified national e-cigarette trading management platform. E-cigarette product manufacturers and e-cigarette brand holding enterprises that have obtained tobacco monopoly licenses in accordance with the law shall sell e-cigarette products to e-cigarette wholesale enterprises through the e-cigarette transaction management platform. Enterprises or individuals that have obtained a tobacco monopoly retail license and are qualified to engage in e-cigarette retail business shall purchase e-cigarette products at local e-cigarette wholesale enterprises.
Zhao Yangbo said that before the e-cigarette brand in the sales of no particularly strict form, some through micro-business, some through the store, some through the investment exhibition. "This provision is equivalent to the brand side can not directly sell e-cigarettes to anyone in the future, may be the future sales behavior will be handed over to the wholesale enterprises as the main body to do, the vast majority of dealers in the market also need to trade with enterprises with wholesale qualifications, rather than directly from the brand side to take goods." In addition, "not all stores can successfully obtain e-cigarette sales permits, which will also cause a number of e-cigarette stores to close." ”
A scholar who has long been concerned about the tobacco industry said, "After the establishment of a unified trading platform, only commercial companies in the China Tobacco system can do wholesale." She told reporters that taking traditional cigarettes as an example, companies outside the China Tobacco system cannot engage in tobacco production and circulation.
In Zhang Yi's view, in the future, e-cigarette sales will be unified through the trading platform built by the state, and the three streams of funds, commodities and taxes will be unified, and chaos such as collusion, price chaos, counterfeiting and shoddy goods, tax evasion and tax evasion will be eradicated.
Article 20 of the Administrative Measures also stipulates that enterprises or individuals that have obtained a tobacco monopoly retail license and are qualified to engage in e-cigarette retail business shall not exclusively operate e-cigarette products for marketing and sale.
"The non-exclusive operation means that brand stores will become a thing of the past, replaced by all collection stores." Fang Hui said that this will have more opportunities for a single brand to reach consumers. However, the product competition of various brands will also be more direct and fierce.
Brand side transformation pains
The new regulations are about to land, and brand enterprises are also facing the pain of adjustment.
In November 2019, Bode announced the launch of the "Thousand Cities and Ten Thousand Stores" plan. Fang Hui said that Bode's "thousands of cities and ten thousand stores" plan has been done for more than two years, and the total number of various types of stores (directly operated stores, franchised stores) has exceeded 6,000 at the most, and since the end of last year, the number of stores has also been adjusted due to the impact of policy expectations, and there are still thousands of stores left. "Platinum will assist stores in applying for a license."
Zhao Yangbo said that RXR shiwu has stopped the production of fruit-flavored electronic cigarettes, and at the same time, in response to the national standards in this policy, it has initially entered the research and development of new products, including smoking equipment and smoke bombs. "Our brand has also set up a supervision to strictly manage all our offline dealers, and will not allow sales of products that do not meet national standards after May 1."
Zhao Yangbo also said that the specialty stores that cooperate with RXR Shiwu electronic cigarettes may clear the inventory of non-tobacco-flavored e-cigarettes before May 1, and RXR Shiwu will also invite some core franchisees to develop new products that meet national standards. For convenience stores that cooperate with RXR Shiwu, "because they do not rely on the single category of e-cigarettes, those who are optimistic about the prospects of e-cigarettes may actively prepare for follow-up cooperation." However, there are also some partners who may wait until the regulatory policy is officially implemented and gradually withdraw from the sale of e-cigarettes. ”
In addition, the new regulations also have a more detailed restriction that all e-cigarette products in the future should have a safety lock function, that is, to avoid the use of minors from the perspective of products. "This is not difficult to achieve technically, but more than 95% of the e-cigarettes on the market did not have security locks, which means that all brands need to reconstruct their products in order to comply with the operation in the future." Zhao Yangbo said.
Fang Hui said that On the one hand, Bode is now adjusting its inventory according to market demand. "The new regulations have triggered some consumers to buy in advance, and some users have purchased a large number, and Bode needs to do a good job for stores and users." On the other hand, Platinum is preparing for the production of new products, and at the same time, it is also preparing people, money and materials for the upcoming new era.
Zhang Yi believes that for existing e-cigarette industry practitioners, the short-term may face pain, the business model should change, the profit margin may also decline sharply, and the problem of user loss may occur immediately. The regulations that are not allowed to operate specialty stores will also bring certain losses to enterprises that have invested in the construction of this channel at high costs before.
After the State Tobacco Monopoly Administration issued the "Management Measures" announcement and the "Second Draft for Comments", MOTI Magic Flute, YOOZ Yuzu, Boulder Bode and other e-cigarette brands also issued announcements saying that they will resolutely implement the management measures, actively implement regulatory requirements, stop the production of non-tobacco flavor products used in the domestic market, and carry out production and operation activities according to law.
However, Zhao Yangbo said that there are still some links in the new regulations on e-cigarettes that need to be clarified. For example, which enterprises can really be approved by the state to produce? How are taxes paid? 0 Nicotine products are not included in the new regulations for e-cigarettes? "There are also some companies that may use the same electronic cigarette technology form, but what it gives users to inhale is not nicotine, but for example, betel nut, similar to this kind of e-cigarette product called betel nut, will it also be incorporated into the regulation?"
It is of great significance for preventing teen addiction
Since 2018, the state has introduced a series of regulatory measures for the e-cigarette industry. When talking about the background of the formulation of the "Management Measures", the State Tobacco Monopoly Administration said that in recent years, due to regulatory gaps, the e-cigarette industry has developed in disorder, especially some operators have publicized and misled consumers, induced minors to smoke, and infringed on the physical and mental health of minors. All sectors of society have responded strongly and have continuously called for strengthening supervision.
"The "Management Measures" is actually equivalent to the original set of management systems for traditional cigarettes, fully applied to electronic cigarettes, from the source of raw materials for electronic cigarettes, to production, to circulation, all the way to retail and other links, are controlled." The above-mentioned scholars who have long been concerned about the tobacco industry said.
The Administrative Measures are of greater significance to the protection of adolescents. The World Health Organization issued a microblog affirming China's move to pass legislation to ban the sale of flavored e-cigarettes other than tobacco flavors. "Some flavorings have been shown to be toxic, such as aldehydes such as vanilla and cinnamaldehyde flavors, and flavorings used to produce a buttery flavor have been shown to cause bronchiolitis occlusion (commonly known as 'popcorn lungs'). Banning flavored e-cigarettes is of great significance to prevent teens from using e-cigarettes and nicotine addiction. ”
In the view of the above scholars, if there is no restriction, the taste of e-cigarettes can be infinitely more, "so that there is no way to evaluate the different ingredients it adds and their harm to the human body." ”
"But in the long run, a regulated and stable market is worth slowly cultivating." The new regulations are very demanding for licensed enterprises at the production and manufacturing ends, and only powerful enterprises can continue to stay on this track, which is a good thing for the e-cigarette industry that has been fighting with nearly a thousand brands before. Zhang Yi said.
Internet analyst Ding Daoshi also said, "In the past few years, many companies have actually been shaking, because they are not sure whether this model is legal. Entering a new era of standardized development is beneficial for large and standardized brands and enterprises. Before the e-cigarette industry was mainly efficiency first, and later, its standardization and compliance must be put first. ”
In Ding Daoshi's view, there are two main models in the field of e-cigarettes, one is a relatively lightweight operating model, such as mainly relying on cooperative enterprises to produce smoke bombs, and the other is a heavier model, and each link is controlled as much as possible. "Both models have pros and cons. In the future, with the development of industry legalization and compliance, if an enterprise has the ability to control more chains and has strong capital and channel support, then its commercial value will be more prominent in the future. ”
Yu Jinyong, managing partner of Zhongbei Dream Investment, believes that from the perspective of investment, there are not many opportunities for angel investment in this field, "The structure of e-cigarettes is relatively simple, with chips, batteries, and some other components, which are relatively mature as a whole." The current policy is good for companies that can get a license, but it may be difficult for a startup to do these things now, unless it has some special features, and I think this opportunity is very rare. ”
"However, there may be opportunities for these funds or investments in the relatively later stages, and if one or more such companies are selected, the returns will be good, especially in the long run, which can survive this short-term and medium-term profit." At the same time, Yu Jinyong mentioned that the export of e-cigarettes will not be greatly affected. "With legal status, exports may also become more compliant, and for licensed companies, they may be better supported." Another former investor also said, "The high certainty is that major brands will increase their efforts to go overseas." Southeast Asia and the Middle East are already very large. ”
According to a previous report released by Ai Media Consulting, by 2021, Chinese enterprise manufacturing will account for more than 95% of the global electronic atomization capacity, which will be sold to more than 200 countries and regions. It is estimated that the export market size will reach 165.88 billion yuan in 2022.
Fang Hui is still full of confidence in the e-cigarette industry. "Strict regulation is a long-term positive for the industry. Although there will be great changes from products to channels, Bode firmly believes that China's e-cigarette industry has great potential. Platinum has stockpiled enough technology and products to fully meet the requirements of the method. ”
Zhang Yi believes that the ban on the sale of flavored products, the official withdrawal of "steam juice", the small age user group will be greatly reduced, and the e-cigarette will return to the original intention, with traditional smokers as the audience, and provide smokers with alternative products for reducing focus and reducing harm as the starting point. "With reference to the management of foreign markets, compared with the currently popular atomized electronic cigarettes, solid electronic cigarettes that are still in the market incubation period may become a bright spot in the market."
"On the other hand, we also noticed that the management system will be officially implemented on May 1, leaving a short transition period for the industry." Ai media monitoring data shows that there are currently more than 50,000 e-cigarette stores of various types in China. "How they transform or adapt to the new rules is a question. For production enterprises, according to the new regulations, research and development, the production of products that meet the requirements of the corresponding time, is the need to channel and clarify the problem. Zhang Yi said.
Zhao Yangbo is still optimistic about the global e-cigarette market, "Now the first step is to meet national standards and compliance first, and then the competition may be the organizational efficiency of enterprises, as well as forward-looking and technological research and development strength." We are still more confident. ”