The e-cigarette industry that is hard to look forward to "legal identity", from production enterprises to sales ends, and even to consumers, is currently facing the problem of left or right.
Aoyi news reporter visited and learned that in the countdown to the new regulations on electronic cigarettes, some e-cigarette consumers are frantically hoarding goods, and some are considering quitting e-cigarettes from now on; some retail store owners have been selling out goods, and some are still waiting and seeing; as for manufacturers, some have begun to develop tobacco-flavored e-cigarettes, and some have said that they have cooperated with pharmaceutical companies to develop a new crown inhalation therapy...
The "E-cigarette Management Measures" will be officially implemented on May 1, 2022! At that time, the sale of flavored e-cigarettes other than tobacco flavors will be prohibited, and at the same time, e-cigarette retailing will require the application for a tobacco monopoly license and will not be exclusive. At present, there are more than 1,500 domestic e-cigarette manufacturing and brand enterprises in mainland China, 190,000 e-cigarette retail outlets, and 5.5 million people employed, how to ensure the smooth transition between these enterprises and employees? Some experts believe that this requires the joint efforts of the government, the industry and enterprises to successfully overcome the painful period, and the e-cigarette industry will usher in a broader space for development.
E-cigarette consumer choices:
Hoarding like crazy or switching to cigarettes?
On March 11, the State Tobacco Monopoly Administration issued the Administrative Measures for Electronic Cigarettes, which clearly pointed out that from May 1, the sale of flavored e-cigarettes other than tobacco flavors and e-cigarettes that can be added to the atomization by themselves is prohibited. At present, the main tastes of e-cigarettes on the market are divided into seven categories: fruits, tobacco, mint, tea, floral, dessert and wine. The most popular among young people is the fruity flavor, while the tobacco flavor occupies only a very small part of the market.
Pictured: Various flavors of e-cigarettes on the market, Aoyi News shooting
The survey found that young male office workers, young female consumers, and adult students are the "three main forces" of e-cigarette consumer groups. If only the smell of tobacco remains, will these young consumers still choose e-cigarettes? The reporter randomly interviewed a number of e-cigarette consumers, most of whom said that they could not accept tobacco-flavored e-cigarettes, a female consumer who was accustomed to fruit-flavored e-cigarettes told reporters that if e-cigarettes only tasted tobacco, they may later change to smoking fruit-flavored cigarettes, or simply quit smoking.
Figure: Reader message under a brand of e-cigarette public tweet
Why are they so resistant to tobacco-flavored e-cigarettes? An industry insider told reporters, "After all, the tobacco taste of electronic cigarettes is only a synthetic flavor, and there is still a certain gap between the tobacco flavor of cigarettes mixed with tar, and many people feel that the taste is very poor and difficult to accept." ”
Because after May Day will no longer be allowed to sell e-cigarettes other than tobacco flavor, for this reason, many e-cigarette consumers began to hoard goods, and some even bought one or two hundred boxes of cigarette bombs at one time, which also led to the price of fruit-flavored e-cigarettes on the market. There are even rumors in the market that Yueke will uniformly adjust and increase the price of stores, thus triggering the rush of e-cigarette consumers, for which Yueke also issued a special article to debunk rumors and deny. However, the reporter visited a number of authorized stores in Guangzhou and found that some Yueke stores will usually sell 99 yuan a box of cigarette bombs, the price increased to 120 yuan a box. The store clerks of some brands also hinted that there is a shortage of supply now, and the real and fake cigarette bombs are mixed with sales to make a profit.
The choice of 190,000 retail stores:
Closing the door or choosing to transform?
On the one hand, e-cigarette smokers are crazy about fruit-flavored cigarette bombs, and on the other hand, tobacco-flavored e-cigarettes are not popular. A shopkeeper told reporters, "I can't sell a box of tobacco-flavored e-cigarettes for two weeks." "The reporter learned that among the e-cigarette brands on the market, non-tobacco-flavored e-cigarettes account for more than 80%, and some even as high as 90%." If you can only sell tobacco-flavored e-cigarettes in the future, you may have to close your doors," the owner said. There is no doubt that this is a survival problem in front of e-cigarette retailers.
Pictured: The stable customers of e-cigarette stores are mainly young office workers, Aoyi News shooting
At present, in the face of the "sword of Damocles" that the e-cigarette industry is about to fall, some stores are still waiting, and some stores have closed their stores and got off. A partner of a Yueke authorized store in Guangzhou told reporters that since the introduction of the "E-cigarette Management Measures (Draft for Comments)" last year, there have been peers "leaving", and many peers who have not closed stores are also clearing goods at high prices, planning to finally "fish" and then retreat. He said that he is also currently on the sidelines, if the new regulations after the implementation of tobacco-flavored electronic cigarettes, there is a market, may continue to do, if it is really not possible, you can only change careers.
A boss who operates three different brands of e-cigarette stores at the same time told reporters that the previous store needs to be authorized by the brand side, and needs to pay a deposit of about 10,000 yuan, if you do not plan to continue to operate, you can get back the deposit. The reporter learned that many store owners of e-cigarette brands such as Yueke, Magic Flute, and Laimi have successively received the returned deposit.
In March 2021, the Ministry of Industry and Information Technology issued a message saying that "e-cigarettes intend to implement supervision with reference to cigarettes", and the reporter visited a number of e-cigarette stores in Guangzhou, and many shop owners said that the business was not affected. Now, after a year, the reporter visited again and found that many stores have stopped operating. For example, the decoration of a Leimi e-cigarette store in Tianhenan has been dismantled, and the words "Wangpu Rent" are posted on the door. A number of e-cigarette stores that were originally gathered in the fashion Tianhe have closed their doors or changed to smaller stores.
Pictured: An e-cigarette store in Guangzhou that was previously open was in a state of suspension and transfer, and Aoyi News filmed
According to the "2021 E-cigarette Retail Format Blue Book" jointly produced by the two supremes and IECIE, before November 2019, e-cigarettes were not banned from online sales, and e-cigarette retail sales were mainly sold through online e-commerce platforms such as Tmall and JD.com. At that time, e-commerce was the most suitable channel for e-cigarette brand publicity and user reach. Some brands simultaneously promote offline stores, but the main appeal is brand image communication.
In November 2019, after the implementation of the ban on online sales of e-cigarettes, e-cigarette retail stores grew rapidly, and it took less than 2 years to complete the construction of offline channel networks, all over the city. There are nearly 190,000 domestic e-cigarette retail formats, including 138,000 authorized stores, 47,000 specialty stores, and 5,000-7,000 collection stores. There are more than 5,000 stores in Guangdong Province.
Among them, the number of stores exceeds 500, including 9 e-cigarette brands such as Yueke, Yuzu, Magic Flute and Ono, which together account for 93% of the total number of market stores. The total number of Yueke brand stores is about 27,600, accounting for about 58.2% of the total number of specialty stores in the market, which is similar to the number of Sinopec easyJet convenience stores, the largest number of convenience stores in China.
The "E-cigarette Management Measures" to be implemented on May 1 stipulate that retail stores must not exclusively operate e-cigarette products for sale on the market. This also means that in the future, e-cigarette stores may exist in the form of collection stores, e-cigarettes + traditional cigarettes. Soochow Securities Research Report said that e-cigarette stores need to meet the traditional cigarette location restrictions (such as shopping malls, school periphery, etc.) and distance restrictions, and it is expected that a large number of stores will face closure or re-location selection. The existing channel layout of the head brand may be affected, but it is expected to cover more traditional tobacco retail channels with the advantages of the number of user groups and brand advantages.
Lin Hanzhong, deputy secretary-general of the China Electronic Chamber of Commerce, said in an interview with Aoyi News that the "Administrative Measures for Electronic Cigarettes" stipulate that "exclusive operation" is stipulated, that is to say, e-cigarette stores will exist in the form of collection stores in the future. "The collection of multi-party brand sales can prevent the market from forming an oligopoly and play a protective role for other enterprises, which is actually a double-edged sword."
So, where should these hundreds of thousands of e-cigarette retail stores in the country go? In this regard, Lin Hanzhong suggested that e-cigarette companies can turn agents into service providers, so that service providers can assist enterprises in brand maintenance, logistics distribution, after-sales operations and other work of channel stores, in addition to cultivating scattered sales outlets and maintaining good cooperative relations with these outlets. After the introduction of the new regulations, the original dealers need to find their own positioning and entry points to adapt to changes in the market.
Choices for the transition period of enterprises:
In-depth research and development or accelerated transformation and upgrading?
According to the "2021 E-cigarette Industry Blue Book" jointly released by the E-cigarette Industry Committee of the China Electronics Chamber of Commerce and the two supremes, there are currently more than 1,500 domestic e-cigarette manufacturing and brand enterprises, nearly 100,000 e-cigarette supply chain and peripheral service enterprises, and about 5.5 million people directly and indirectly employed. "E-cigarette Management Measures" from March 11 released to May 1 officially implemented, this short 45 days, in the case of supporting rules have not yet been introduced, many people in the industry believe that the e-cigarette industry chain to achieve switching upgrades, smooth transition there is a difficulty, and call for an extension of the transition period.
"Ensuring a smooth transition for small and medium-sized enterprises requires the joint efforts of the government, the industry and enterprises." Xu Xiaoxin, associate professor of the School of Social Development and Public Policy of Beijing Normal University, told Aoyi News that for the regulatory authorities, it is necessary to further clarify the conditions and procedures for various types of license applications, and simplify them as much as possible to reduce the work burden of small and medium-sized enterprises; for the industry, industry organizations should strengthen communication with regulatory departments on behalf of the industry and strive for a certain flexible space for the development of the industry; for e-cigarette companies, the biggest challenge and first priority in the short term is to obtain corresponding permits and obtain legal identity On this basis, seek future development.
Xu Xiaoxin also said that considering the chain from production to retail, the regulatory authorities may consider appropriately extending the transition time of non-tobacco flavored e-cigarette products in the retail link.
"The e-cigarette industry is now regulated, which requires a buffer zone. This buffer zone is based on the actual situation of the enterprise, as well as the state's research and judgment of the industry to comprehensively consider and achieve a balance. After the buffer, it is necessary to clarify the details of each process, and more specific guidelines are needed to allow the industry to slowly transition to another stage. Lin Hanzhong said.
Lin Hanzhong suggested that enterprises in the e-cigarette industry chain should readjust the existing technical standards, production structure and channel structure as soon as possible, and at the same time, wait for the introduction of detailed rules and consider the direction of transformation and upgrading. On the other hand, it is also necessary to adjust the layout of overseas markets. The introduction of the new regulations is strictly conducive to exports, but also conducive to the output of domestic technology and standards, "the real battlefield of e-cigarettes in the future occurs in the international.".
It is understood that e-cigarette companies such as Yuzu, Bolan, Mixuan, and Weita have announced that they will stop producing flavored smoke bombs, and Yueke official announcement said, "The new taste is already on the smooth road." According to other media reports, Simmer is cooperating with U.S. pharmaceutical companies to develop an inhalation therapy for new crown pneumonia and has entered the clinical research stage, which can reduce the production of the new crown virus by 90%.
The future development space of the e-cigarette industry, Xu Xiaoxin believes that it comes from three aspects, one is the domestic large-scale e-cigarette market, the second is the international market, and the third is the large atomization industry that is more closely integrated with health. At present, based on the consideration of eliminating the ambiguous zone of supervision, the "Management Measures" weakens the expression of whether it contains nicotine, and includes a wider range of atomized products into the scope of supervision of the Management Measures. Xu Xiaoxin suggested that as e-cigarette regulation gradually moves to the right track, whether the government should clearly strip nicotine-free atomization products from e-cigarettes and promote the development of the large atomization industry to promote health and Chinese herbal applications.
In the face of shocks, in the throes of industrial development, are retailers staying behind or retreating? Are SMEs facing difficulties or finding another way out? What is the trend of leading enterprises? As e-cigarettes usher in "legal identity", after the industry has experienced a transition period, whether it can reach a new blue ocean of development, the market will give the answer.
Aoyi news reporter Lu Ruoqing Feng Xiaohui