Analysis On The Current Market Situation Of China's E-cigarette Industry in 2021

1、 Overview of electronic cigarette industry

Electronic cigarette is a kind of imitation of cigarette, which has the same appearance, smoke, taste and feeling as cigarette. It is a product that turns nicotine into steam by means of atomization and allows users to suck it.

E-cigarettes are mainly divided into atomized e-cigarettes and HNB (heating non combustible tobacco products). Both of them are battery powered electronic devices that realize heating drive. However, HNB cigarette bombs contain tobacco, which is strictly regulated in China and prohibited from sale; Atomized electronic cigarettes add various edible essence to cigarette bombs, which are loved and sought after by young people.

The atomizer of the first generation of electronic cigarette is easy to burn out, and it is easy to damage the tip of the atomizer when replacing the cigarette cartridge. It will be completely worn out after long-term use, and finally it will not smoke; The main feature of the second generation is that the atomizer has been improved. The atomizer has a protective cover outside, and its service life is longer than that of the first generation; The third generation electronic cigarette adopts disposable atomizer cigarette cartridge, which greatly improves the product quality, changes the appearance and raw materials, and has a stronger sense of design.

The upstream industry of atomized e-cigarette is mainly suppliers of various raw materials such as batteries, chips, cigarette oil, atomizers, etc., the midstream industry is e-cigarette manufacturers and brand companies, and the downstream industry carries out terminal sales through distributors such as cooperative dealers, brand stores and other retail stores.

2、 Current situation of global e-cigarette Market

The World Health Organization, the British Department of public health, the Centers for Disease Control and prevention and other foreign mainstream authorities have evaluated e-cigarettes for several years. At this stage, it is generally believed that e-cigarettes are far less harmful than traditional tobacco and can be used as a smoking control and smoking cessation strategy for smokers, the National Academy of Sciences The evaluation of engineering schools and medical schools shows that "the complete use of electronic cigarettes instead of cigarettes can reduce users' exposure to a variety of toxic and carcinogenic substances produced by cigarette combustion." In 2021, the global e-cigarette market grew rapidly, with a market size of US $80billion, an increase of 120.39% year-on-year.

Data show that the global e-cigarette retail market continues to grow. Some smokers choose to use e-cigarettes to give up smoking over time in order to reduce the harm caused by traditional tobacco, and atomized e-cigarettes are widely favored among teenagers. In 2021, the retail market size of atomized e-cigarettes increased to $35.85 billion, with a growth rate of 17%. HNB is banned from sale by departments, countries and regions due to the tobacco contained in cigarette bombs, The overall scale is smaller than that of atomized e-cigarettes, reaching US $21.05 billion in 2021, with a year-on-year increase of 43.4%.

As PMTA has passed the certification of iqos and VUSE solo, the substitution attribute and some harm reduction attributes of e-cigarettes have been certified by the top law enforcement agency of the U.S. drug administration. The acceptance of e-cigarettes in the U.S. market is high, and the penetration rate of e-cigarettes is as high as 38%. The penetration rate of e-cigarettes in Japan and the United Kingdom ranks second and third, with 30.3% and 20.9%. China's e-cigarette related industries are strictly regulated and online platform sales are prohibited. At present, the market penetration of e-cigarettes is only 1.5%.

3、 Current market situation of electronic cigarette industry in China

China's e-cigarette industry is one of the representative industries that grew against the trend during the epidemic. Smokers' awareness of the harm reduction of e-cigarettes is getting higher and higher, and quitting smoking and harm reduction has gradually become the mainstream voice. On the whole, the scale of the export market is larger than that of the domestic market, and the demand for e-cigarettes in foreign countries such as Britain, the United States and Japan is large. In 2021, the scale of China's e-cigarette export market increased rapidly from 34.42 billion yuan in 2020 to 101.5 billion yuan, with a growth rate of 195%. The growth of the domestic market is relatively stable. In 2021, the market scale was 14.5 billion yuan, an increase of 73% year-on-year.

Because the price of cigarettes abroad is generally high, and the price of e-cigarettes is relatively "people-friendly", it has formed a strong substitution effect abroad. China has an advantage in the global e-cigarette industry. In 2021, the total export volume of China's e-cigarettes exceeded 100 billion yuan, reaching 138.3 billion yuan, with a growth rate of 180%. China's e-cigarette industry has developed rapidly in the world, According to the report of the 2022 blue book on e-cigarette industry export issued by the e-cigarette Professional Committee of the China Electronic Chamber of Commerce, China's e-cigarette export volume will reach 186.7 billion yuan in 2022.

In 2021, the total export volume of e-cigarettes in China was 138.3 billion yuan, of which 53% were exported to the United States. The U.S. e-cigarette consumption market is broad, and the export volume of the European Union, Russia and the United Kingdom accounted for 15%, 9% and 7% respectively. With the promotion of e-cigarettes, the penetration rate of e-cigarettes in the European Union, the United Kingdom and other regions is expected to further deepen, and the overseas market development space is broad.

The content of the blue book shows that the number of electronic cigarette patent applications has increased rapidly since 2013, and the number of patent applications has further increased in the past three years. Since the fourth quarter of 2021, the number of patent applications has increased every month, and the total number of patent applications is expected to exceed 7000 in 2022. E-cigarettes are gradually moving towards high technology. Domestic enterprises focus on research and development, forming certain industrial technical barriers, which is conducive to the development of China's e-cigarette industry.

4、 Competition

At present, the best selling e-cigarettes in the market are closed e-cigarettes in atomized e-cigarettes, including cartridge changing e-cigarettes and disposable e-cigarettes. Among them, Relx is the most familiar e-cigarette brand in the market and accounts for the largest market share, accounting for 74.81% of the overall market. It is the largest e-cigarette brand in China. Myst, Moti, Vvild and other brands account for a relatively small proportion, and the e-cigarette market is almost monopolized.

According to the 2021 e-cigarette industry blue book, by the end of 2021, there were more than 1500 e-cigarette manufacturing and brand related enterprises in China, including more than 1200 manufacturer enterprises, more than 200 e-cigarette brand enterprises and about 120 cigarette oil enterprises. There are nearly 190000 e-cigarette retail formats in China, including 138000 authorized stores, 47000 exclusive stores and 5000-7000 collection stores. Among them, Chengdu is the city with the largest number of e-cigarette retail stores in China, followed by Beijing, Shanghai, Shenzhen and Chongqing.

China boton is the first listed enterprise in China's essence industry in Hong Kong. After years of operation and development, it has become a large modern enterprise group covering four core sectors: essence industry, electronic atomizer industry, big health industry, and industrial park operation and management. In 2021, the operating revenue of China's electronic cigarette products related business was 1.2 billion yuan, accounting for 53.1% of the total revenue, an increase of 51.5% over 2020. It can be seen that the sales market of electronic cigarette products has developed rapidly.

Relx technology was founded in 2018, and its main business includes the R & D, design, manufacturing and sales of electronic atomizers. With core technologies and capabilities covering the whole industrial chain, it has quickly occupied the market share of the e-cigarette industry. In 2021, the operating revenue of fogcore technology increased rapidly, reaching $1.321 billion, with a gross profit of $569 million and a profit margin of about 43%.