Over The Past Two Years, The Growth Rate Has Increased By 63 Times, And Disposable E-cigarettes Have Staged A 'barbaric Growth'

In the story of e-cigarettes, there is never a lack of growth myths. From the earliest HNB represented by IQOS, to the cotton core atomization represented by JUUL, and the ceramic atomization represented by Simore/RLX, all have gone through a stage of savage growth.
Nowadays, the protagonist of the growth story of e-cigarettes has become disposable e-cigarettes. In the past two years, the sales scale of disposable e-cigarettes has increased nearly 63 times. This is particularly evident in the European market. Disposable e-cigarettes saw explosive growth in 2022, with sales increasing to $1.54 billion, a year-on-year increase of+811.8%.
More importantly, the strong disposable e-cigarettes are squeezing the market for interchangeable and open e-cigarettes. In 2022, the sales of disposable e-cigarettes in the UK and the US accounted for 43.1% and 51.8% respectively
In the past, when many people talked about the e-cigarette industry, they inevitably talked about policy concerns, but e-cigarettes continued to explode in policies, demonstrating their strong vitality. From HNB to atomized e-cigarettes and now to disposable e-cigarettes, a development law of the e-cigarette industry has been revealed:
It is never a policy that defeats e-cigarettes, but another and better e-cigarette.
A Big Bet on Investors' Performance
On July 11th, the stock price of Yinghe Technology suddenly rose by 3.07%, marking the beginning of a major rally. In the following less than two months, the stock price of Yinghe Technology rose from a peak of around 17 yuan to 32.9 yuan, nearly doubling.
The rapid rise in the stock price of Yinghe Technology is a bet placed by investors on the reported performance. And what investors are betting on is the explosive growth of SKE Crystal Bar, a disposable e-cigarette brand owned by Skoll, a subsidiary of Yinghe Technology Holdings, in the UK and Europe in the first half of the year.
From the data, Skoll did not disappoint investors' expectations. In the first half of 2023, Skoll achieved a revenue of 1.433 billion yuan, a significant increase of 1477.33% year-on-year; The net profit achieved was 417 million yuan, which has reached 76% of last year's total. In the UK market, Skoll's sales have jumped from seventh place in January this year to fourth place in April.
Behind Skoll's high performance growth, the "whirlwind" caused by disposable e-cigarettes is sweeping across Europe.
According to Euromonitor data, the sales of e-cigarettes in Western Europe have rapidly increased from $2.11 billion in 2015 to $5.69 billion in 2022. Among them, disposable e-cigarettes experienced explosive growth in 2022, with sales increasing to $1.54 billion, a year-on-year increase of+811.8%.
Especially in the UK, where e-cigarettes are used as smoking control tools, the sales of disposable e-cigarettes in 2022 increased from+1116.9% year-on-year to 1.08 billion US dollars, and the proportion of sales of disposable e-cigarettes also increased from 0.6% in 2020 to 43.1% in 2022.
The rise of disposable e-cigarettes has greatly squeezed the market share of cartridge swappable and open e-cigarettes. From 2015 to 2021, the most popular category of e-cigarettes among underage users was the open type. In 2022, disposable e-cigarettes quickly became popular, with a proportion increasing from 7.8% in 2021 to 52.8% in 2022. After reaching its peak in 2020-2021, the cartridge swapping type was seized by the disposable category, along with the open type. The preferred category of e-cigarettes for adults is open from 2021 to 2022, but the proportion of disposable products has also increased.
This trend is also happening in the United States. From January 2020 to December 2022, the sales share of replacement e-cigarettes in the United States decreased from 75.2% to 48.0%, and the sales share of disposable e-cigarettes increased from 24.7% to 51.8%
Throughout the development history of e-cigarettes, despite long-term policy suppression, this has not affected the outbreak of strong vitality: from the barbaric growth of early HNBs, to the rise of atomized e-cigarettes represented by JUUL and RLX, and finally to the rapid development of disposable e-cigarettes at present.
To some extent, it has never been a policy that defeated e-cigarettes, but another and better e-cigarette.
Why are disposable e-cigarettes being sought after?
In the past two years, the sales scale of disposable e-cigarettes has increased nearly 63 times. Looking back, there are roughly two reasons for the rapid increase in one-time sales:
In terms of price, the advantage of disposable e-cigarettes is obvious. In 2021, the UK government raised the tax rate on tobacco products such as cigarettes, and a pack of 20 cigarettes will charge 16.5% of retail sales plus a tax of 5.26 pounds. According to Huachuang Securities, the prices of disposable e-cigarettes ELFBar and VuseGo per milligram of nicotine are respectively 0.08/0.15 pounds, far lower than the 0.56 pounds of traditional cigarette Marlboro (Red).
Although the price per milligram of nicotine is slightly lower than that of disposable e-cigarettes, both cartridge swappable and open e-cigarettes have their own drawbacks. For example, the former requires an additional cigarette fee of at least £ 10, while the latter has disadvantages such as high threshold, difficulty carrying, and easy oil leakage.
Considering the current unstable economic situation in Europe, the price advantage of e-cigarettes over traditional cigarettes has been further strengthened. Since July 22, the UK CPI index has increased by over 10% for multiple consecutive months, while the GKF consumer confidence index has remained at a low level, reaching a new low since the 1974 survey in September 22.
Besides price, taste is also an important reason for the outbreak of disposable e-cigarettes. In the rise of e-cigarettes, their diverse flavors are an important reason for their popularity among young people. According to data from iiMedia Research, in 2021, 60.9% of Chinese e-cigarette consumers preferred rich flavors such as fruits and food, while only 27.5% preferred tobacco flavors.
After the ban on replacement cigarettes in the United States, the loophole in disposable cigarettes has been left, driving a large number of original replacement consumers to switch to disposable electronic cigarettes. Taking ELFBar and LostMary, which have the highest sales volume, together they can provide a total of 44 flavors, far higher than other brands.
This also helped disposable e-cigarettes quickly seize the underage market. From 2015 to 2021, the most popular category of e-cigarettes among underage users was the open type. In 2022, disposable e-cigarettes quickly became popular, accounting for 52.8% in 2022, up from 7.8% in 2021. According to ASH data, the top three flavors among minors are fruity mint&menthol/chocolate&dessert: among adults, fruity flavor is still the preferred choice, accounting for 35.3%.
From this perspective, the price advantage and diverse flavors of disposable e-cigarettes have become the reasons for their popularity.
The Regulatory Clouds of Disposable Electronic Cigarette Head
Despite the fierce rise in disposable e-cigarettes, investors are still full of doubts about them.
The first to bear the brunt is naturally policy risk. Compared to other e-cigarette products, the policy threat of disposable e-cigarettes comes more from environmental protection. Against the backdrop of rapidly soaring sales, the environmental issues caused by the indiscriminate disposal and inability to reuse of lithium batteries in disposable e-cigarettes are gradually coming into the public and British government's attention.
According to a study by the UK non-profit organization MaterialFocus, 37% of e-cigarette consumers purchased disposable e-cigarettes in 2021, while nearly 1.3 million disposable e-cigarettes in the UK were discarded. If each disposable e-cigarette contained 0.15 grams of lithium, 10 tons of lithium would be discarded annually. In terms of horizontal comparison, both cartridge swappable and open e-cigarettes are superior to disposable e-cigarettes in terms of environmental protection.
At the same time, the attractiveness of disposable electronics to minors may also attract stronger regulation. Although e-cigarettes are considered an important tool for quitting smoking in the UK, they have also significantly increased the penetration rate of e-cigarettes among minors.
According to World Bank data, the penetration rate of underage e-cigarettes in the UK has increased from 1.2% in 2015 to 8.6% in 2022, while the number of e-cigarette users has increased from 200000 to 1.54 million.
The rapid rise has raised concerns among British parents and some government officials, as ministers are considering banning the sale of fruit flavored and sweet e-cigarettes to reduce their popularity among underage populations.
In fact, such concerns are becoming a reality. In the UK, the ban on disposable products has also been mentioned multiple times recently. British MP Adam Avery stated that he would support a ban on disposable e-cigarettes if their non-compliance and underage use issues cannot be controlled. Just a few days ago, French Prime Minister Elizabeth Borne announced that France will implement a "national tobacco control" plan. As part of this plan, the French government hopes to ban disposable e-cigarettes, which are highly favored by young people.
From this perspective, the development prospects of e-cigarettes are certainly optimistic, but whether disposable e-cigarettes are the ultimate answer to the industry still requires a question mark.