Under the smoke, the situation of the magic flute is not optimistic, how to break the situation? Regulation is tightening, and the future of the magic flute is uncertain

This year's e-cigarette days are not good.

Since the first half of the year, the stock prices of e-cigarette listed companies have been downward, and while the stock market is turbulent, there has also been a weak sales in the industry, and the trend of offline store closures has risen, although some recovery is also concentrated in a small range.

As the domestic e-cigarette boss, Yueke's performance is not optimistic, according to its second quarter financial report, Yueke's revenue in the second quarter increased by 6% month-on-month, but the gross profit margin fell by 0.9%, and the net profit under non-GAAP increased by 6.8% month-on-month, that is to say, limited by the fierce expansion of domestic offline stores, Yueke's growth performance was not as strong as expected, and the stock market performance continued to be sluggish.

As the industry's second-oldest, Magic Flute invested 80 million subsidies in August to help offline stores tide over the difficulties, but the pain of rapid store growth suffered by the market is not short-lived, and with the impact of industry supervision and sluggish sales, it may exacerbate this pain.

<h1 class="pgc-h-arrow-right" data-track="5" > the magic flute that presses forward and chases after, how to break the situation? </h1>

Founded in 2018, Magic Flute has achieved the second position in the industry in less than three years, and it can be said that the performance is quite strong. Especially after experiencing the outlet of e-cigarettes and industry supervision, Magic Flute still occupies a certain position in the market, and gradually becomes the electronic cigarette brand in the domestic market second only to Yueke.

The magic flute can open the market, the key to standing out in the e-cigarette brand is to find differentiation, whether it is the appearance of the product, or the sense of product experience, especially in the case of serious homogenization of e-cigarettes and low thresholds, to obtain market recognition. This is also why after attracting financing from top investment institutions such as SIG and Jade Capital, Magic Flute has not come to the forefront of the e-cigarette industry while capital continues to increase.

Technological innovation and research and development have provided impetus for the differentiation of magic flutes, including the development of smart Bluetooth electronic cigarette MOTI S, making it one of the world's three major Bluetooth electronic cigarette products, and the first time in the industry to use pure titanium MOTI · C stars and so on. In the 2021 release of THE MOTI · MEGA PRO provides a dual suction mode and a unique heating scheme for flavors, in addition to LED screen interaction and fast charging function, coupled with a novel appearance to make it a devil-like product.

In addition to the appearance and fast charging and other features that increase the sense of experience, this product of Magic Flute actually breaks the boundary of large and small cigarettes with technology, and meets the dual needs of consumers for oral inhalation and lung suction, which is precisely the key to Magic Flute's uniqueness in the market. In fact, through the technology to enhance the premium level of electronic cigarettes, while having a good taste, but it is difficult to imitate, which is also the reason why the magic flute can maintain the second place in the electronic cigarette market.

Of course, magic flute also has a good distribution channel. As the brand with the most direct stores in the industry, coupled with its own dealer channels, it can maintain the expansion and operation of the store at a very high level. And with the hierarchical management of dealers, magic flutes maintain a certain expansion rate and enhance the stability of the store. Coupled with the technology-driven electronic cigarette products, magic flute has the confidence to challenge Yueke.

But then the problem arises. The quality of e-cigarettes is essentially a matter of taste, and the taste of e-cigarettes is not much different at the top level, although the taste of Magic Flute Slite is even the taste ceiling in the atomization of feelm. However, this taste is based on international cooperation with Simar, and it is not unique, and once this taste is a prominent advantage in the market, brands such as Yueke and Yuzu, which are also cooperating with Simar, will also do it.

Yueke revealed in the June earnings conference call that there are more than 15,000 offline stores offline, and magic flute currently has about 6,000 terminal stores, obviously it is not simple to shake the status of Yueke, and it is still far from wanting to keep up with the pace of Yueke, but the latecomers are endless. However, it has more than 1,000 stores, and Yuzu has 8,000 offline stores and nearly 20,000 channel outlets. This year also ran a dark horse, MR Mirui was established in January 2021, and the number of stores reached 3,000 at the end of May.

Obviously, the follow-up of the magic flute is not to be underestimated, the expansion of offline stores is bound to seize more market share, and only offline channels can spread the e-cigarette competition will be more intense, how to find a balance between the magic flute and store expansion is crucial. The two largest mobile phone distribution companies in China, Tianyin Holdings and Aishide, have also begun to get involved in e-cigarette stores, the former cooperating with Bode and the latter is Yueke, and with the expansion of distribution channels, the situation faced by Magic Flute is not optimistic.

<h1 class="pgc-h-arrow-right" data-track="14" > regulations are tightening, and the future of the magic flute is confusing</h1>

On September 10, the blacklist of e-cigarette companies prohibited from entering the country disclosed on the official website of the US FDA included Shenzhen Leiyan Technology, the operating company of Modi, which means that if Modi cannot prove to the FDA its qualifications to enter the US market, it will lose the huge e-cigarette market in the United States, which is bad news.

Moreover, on the same day, the Hong Kong Legislative Council held a working meeting on the amendment to prohibit heating cigarettes and e-cigarettes, and once the bill is passed, Hong Kong's transit function as an overseas export of e-cigarettes will be affected. Moreover, Hong Kong Chief Executive Carrie Lam Said in her policy address that year that the Hong Kong government was ready to draft a bill to ban the import, manufacture, sale, distribution and promotion of e-cigarettes.

In other words, whether It is an e-cigarette transit or an e-cigarette sales in Hong Kong, it is possible to lose the legal license status of e-cigarettes. And this is not only bad news for Magic Flute, but also a pessimistic impact on the rest of the domestic e-cigarette companies.

On June 18, 2021, the State Tobacco Monopoly Administration and the State Administration for Market Regulation issued the "Special Action Plan for Protecting Minors from Tobacco", emphasizing the requirements of promoting the legalization of e-cigarette supervision and carrying out a three-month special action to prevent the "resurgence" of chaos in the e-cigarette market.

At the top of the list of complaints from Magic Flute is the sale to minors, that is, Magic Flute does not comply with the relevant regulations. Moreover, the sale of e-cigarettes to minors has increased the intensity of supervision.

On May 26, the National Health Commission released the "China Smoking Hazards Health Report 2020" pointed out that "there is sufficient evidence that e-cigarettes are unsafe", nicotine as the main component of e-cigarettes, in addition to making users dependent, adolescent exposure to nicotine may cause long-term adverse consequences for brain development, which may lead to learning disabilities and anxiety disorders.

The data shows that in recent years, the smoking rate of people over 15 years old in China has decreased significantly, but the contact rate of e-cigarettes has increased significantly. The e-cigarette use rate among young adults aged 18 to 29 increased significantly from 2.0% in 2015 to 2016 to 2.7% in 2018-2019. It is also the reason why countries have agreed to ban the sale of e-cigarettes to minors.

But this problem may not be solved for a short time. The reason is that the consumer group targeted by the e-cigarette itself, in addition to the smokers who have the demand for "quit smoking", after being proved to be false demand, is the young smoker, but the frequency of consumption and repurchase are not stable, and the e-cigarette company has turned to younger people. Because e-cigarettes have excellent appearance and good electronic attributes, they can also meet some of the vanity needs of minors, so that underage consumers of e-cigarettes cannot be eliminated in the true sense.

This will in turn prompt the government to strengthen supervision and further legislative restrictions, and the age of e-cigarette lung disease that occurs in the United States is mostly concentrated in young people, that is to say, the monitoring of e-cigarettes will be more severe in the future, and the future situation of the magic flute is not optimistic.

In fact, e-cigarettes are essentially the electronicization of cigarettes, just like e-books, but the characteristics of e-cigarette consumption prompt their consumption targets will be young people, and they can only maintain sufficient market share by continuously cultivating new young people. Even if e-cigarettes claim many taste experiences, they cannot change the status of cigarettes, while not low prices and additional risks limit their development.

In addition, in order to meet the needs of consumers, electronic cigarettes have to start from the taste, appearance and other aspects, which shows that the consumption attributes of e-cigarettes are not simply smoking attributes, but also have trends, electronic products and other attributes, which may provide an idea for the future development of e-cigarettes.

From the current situation, with the strengthening of supervision, the e-cigarette market may be subject to more stringent regulatory measures, and the future e-cigarette market may be more difficult to survive and the head effect is stronger. Under the new round of shuffling, whether the magic flute can stand in the end is still unknown, not to mention that the magic flute does not have enough market discourse, in the front of the Yue carving, after there are yuzu, mi rui and other competitors, the second position of the magic flute is not stable.