After clearing the inventory and adjusting the store's electronic cigarette "Duantian" new regulations, the industry will change
to "Duantian", the younger user group will be greatly reduced, and the electronic cigarette will return to its original intention; however, the brand side is facing the pain of transformation
"Almost all the factories that make fruit flavors have stopped production. We sell as many as we have, on a first-come, first-served basis." Recently, a staff member 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 will take effect on May 1, 2022.
Among them, Article 26 stipulates that it is prohibited to sell flavored electronic cigarettes other than tobacco flavors and electronic cigarettes that can add atomizers by themselves.
The new regulations on e-cigarettes are imminent, and some businesses are in the final sprint.
Many stores took the last month or so as a good time to rush, and some even raised prices, and the price increase even reached 30%.
However, with the imminent implementation of the new regulations, the electronic cigarette industry is facing the pain of adjustment.
Some e-cigarette practitioners told Shell Finance reporters, "The proportion of non-tobacco-flavored pods in products is relatively large now, and adjustments need to be made in the future. At the same time, the user's response to taste adjustment is unknown." Stopping production, clearing inventory, adjusting stores, and rebuilding products are becoming their daily routine.
At the same time, with the new regulations that e-cigarette retailers are not allowed to operate exclusively, some brands with more specialty stores may face the pain of broken arms.
Many industry experts said that for existing e-cigarette industry practitioners, they may face pain in the short term, such as loss of users, adjustment or closure of specialty stores.
"But in the long run, a regulated and stable market is worth working hard. The new regulations have high requirements for licensed companies on the production and manufacturing side, which means that only powerful companies can continue to stay on this track. , This is a good thing for the electronic cigarette industry where nearly a thousand brands were fighting in chaos before."
Electronic cigarettes "broken sweet": merchants build momentum, and some stores increase prices by 30%
Recently, a Shell Finance reporter visited the offline stores of e-cigarettes in Beijing and found that many brand stores have entered the "out of stock mode", especially some e-cigarette cartridges with best-selling fruit flavors, such as mung bean flavor and taro flavor.
In a RELX store in a shopping mall, dozens of boxes of electronic cigarette cartridges are placed on the counter, and only seven or eight flavors are available.
"After May 1st, the fruit flavor will not be sold. Customers are basically stocking up now, and there are not many left." From the adjacent area of the electronic cigarette holder for customers to try, it can be seen that there are several original flavors. Ten kinds, including old popsicles, mung bean popsicles, coffee, mojito, kumquat passion fruit, taro ice cream, etc.
The staff of the store told reporters that most fruit flavors are out of stock at present. If they want to buy flavors that are not available in the store, customers need to register and pay first, and then they will go to the company to ask for the goods. If they are available, they will be available in a few days. Send express package, if there is no goods, will be refunded at that time.
The reporter from Shell Finance then came to another Snowplus e-cigarette store. During the dozens of minutes in the store, the clerk was always busy taking orders online on WeChat, and customers came to try and buy from time to time.
"A lot of fruit flavors have been packed empty." While recording the orders placed by customers on WeChat, she pointed to a pile of packages on the counter in 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 prohibiting businesses from selling e-cigarettes through the Internet, because e-cigarette consumers mainly consume pods, almost every store will add first-time customers to the dedicated WeChat account. In the future, the repurchase of pods in the future will be carried out on WeChat, and then the store will send express delivery products.
In a YOOZ e-cigarette offline store, the reporter met Zhang Yu (pseudonym), a 33-year-old white-collar worker who is a fan of fruit-flavored e-cigarettes.
Zhang Yu said that there was not much fruit in the store near his home, 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.
"From a personal point of view, I'm quite disappointed that I won't be able to smoke fruit-flavored pods in the future." He decided to reserve half a year's worth of pods first.
Under the enthusiasm of some consumers to stock up, some stores took the opportunity to raise prices.
The price of pods in a RELX franchise store has risen from 99 yuan/box to 129 yuan/box. "The reason why other stores did not increase the price may be because there are too many goods. We only have this on the shelf now." Another YOOZ e-cigarette store The clerk told reporters that there was no price increase in his store.
"But I usually save some RELX electronic cigarettes, and I can sell them to you for 140 yuan per box."
There is actually no lack of "rendering momentum" behind the so-called panic buying. Many stores have already used the last month or so as a good time to boost sales.
A number of brand stores issued notices on WeChat Moments, announcing "fruity emergency" and calling on old customers to "hurry up and stock up."
A Leimi electronic cigarette salesman told reporters, "The sales volume is very large now, and some manufacturers have to produce some more." An electronic cigarette brand store even gave a "stocking strategy" in the circle of friends.
There are also some consumers who are indifferent to the new regulations.
Liu Hao (pseudonym) switched from traditional cigarettes to fruit-flavored electronic cigarettes a few years ago. "If you smoke traditional cigarettes at home, the taste is too great. You can't smoke paper cigarettes in office buildings, but electronic cigarettes can." He said he would not Stocking up, "If it really doesn't work, just quit. If you don't have to, go back to smoking cigarettes." He had smoked tobacco-flavored electronic cigarettes before, and felt that the taste was "still a bit choking." As for the possible future tobacco-flavored electronic cigarettes, "It depends on the taste."
Electronic cigarettes bid farewell to barbaric growth, and specialty stores may become history
"At present, the proportion of non-tobacco-flavored pods in the product is relatively large, and it needs to be adjusted in the future, and the user's response to the taste adjustment is still unknown." Fang Hui, a partner and CMO of Bode, told Shell Finance reporter that the United States will also control flavors , but it opens up the mint flavor in addition to the tobacco flavor.
"The domestic product control is also more comprehensive this time, including disposable electronic cigarettes and heated electronic cigarettes, which will have a great impact on domestic brands."
Zhao Yangbo, co-founder of the e-cigarette brand RXR, also mentioned that in the domestic market, about 90% of past users mainly purchased non-tobacco e-cigarettes. churn of users.” There could be mass store closures.
"Because if the user base you are in is not enough, the store will not be able to operate." In addition, "(in the future) additional taxes on e-cigarettes will also affect the profits of specialty stores."
The above-mentioned investor Zheng Wei, who has paid attention to the e-cigarette industry, also analyzed that, "This new regulation has led to a lot of SKUs of e-cigarettes, which will make it more difficult for the retail store model in shopping malls to be profitable." "Most consumers do not have long-term solutions. The solution, once the domestic qualitative ban, the big deal is not to buy, return to cigarettes or not to smoke."
In addition to restricting the flavors of e-cigarettes, there are also some regulations in the "Administrative Measures" that deserve attention.
Articles 8 and 11 of the "Administrative Measures" stipulate that the establishment of electronic cigarette production enterprises (including product production, OEM, brand holding enterprises, etc., the same below), atomization production enterprises and electronic cigarette nicotine production enterprises , initial public offering and listing, as well as capital construction or technological transformation to expand production capacity, must be reviewed and approved by the tobacco monopoly administrative department of 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 market," said Zhang Yi, CEO and chief analyst of iiMedia Research.
Article 20 of the "Administrative Measures" stipulates that the tobacco monopoly administrative department of the State Council shall establish a unified national e-cigarette transaction management platform.
E-cigarette product manufacturers and e-cigarette brand holders that have obtained tobacco monopoly licenses in accordance with the law shall sell e-cigarette products to e-cigarette wholesalers through the e-cigarette transaction management platform.
Enterprises or individuals that have obtained the tobacco monopoly retail license and are qualified to engage in the retail business of electronic cigarettes shall purchase electronic cigarette products from local electronic cigarette wholesale enterprises.
Zhao Yangbo said that before the sales of e-cigarette brands did not have a particularly strict form, some through micro-businesses, some through specialty stores, and some through investment exhibitions.
"This regulation means that brands can no longer directly sell electronic cigarettes to anyone at will. Maybe the future sales will be handed over to wholesale companies as the main body. Most dealers in the market also need and have wholesale qualifications. rather than taking the goods directly from the brand.” In addition, “not all specialty stores can successfully obtain e-cigarette sales licenses, which will also cause a number of e-cigarette stores to close.”
A scholar who has been concerned about the tobacco industry for a long time said, "After the establishment of the unified trading platform, only commercial companies in the China Tobacco system should be able to do wholesale." She told reporters that taking traditional cigarettes as an example, outside the China Tobacco system companies may not engage in the production and distribution of tobacco.
In Zhang Yi's view, in the future, e-cigarette sales will be through a unified trading platform built by the state. Funds, commodities, and taxation will be unified, and chaos such as smuggling of goods, disordered prices, counterfeiting, and tax evasion will be eradicated.
Article 20 of the "Administrative Measures" also stipulates that enterprises or individuals that have obtained the tobacco monopoly retail license and are qualified to engage in the retail business of electronic cigarettes shall not exclusively operate the electronic cigarette products sold on the market.
"No exclusive operation means that brand stores will become history, and they will be replaced by collection stores." Fang Hui said that this will give a single brand more opportunities to reach consumers.
However, the product competition of various brands will be more direct and more intense.
Brand transformation pains: stop production to clear inventory, adjust stores, and restructure products
The new regulations are about to be implemented, and brand enterprises are also facing the pain of adjustment.
In November 2019, Bode announced the launch of the "Thousands of Cities and Thousands of Stores" plan.
Fang Hui said that Bode’s “Thousands of City and Ten Thousand Stores” plan has been in place for more than two years, and the total number of various stores (directly-operated stores and franchised stores) exceeded 6,000 at the most. It has also been adjusted, and there are currently thousands of specialty stores left.
"Bode will assist the store to apply for a license."
Zhao Yangbo said that RXR 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 sets and cartridges.
"Our brand has also set up supervision to strictly manage all our offline dealers. After May 1, no product sales that do not meet national standards are allowed."
Zhao Yangbo also said that the specialty stores that cooperate with RXR e-cigarettes may clear their non-tobacco-flavored e-cigarette inventory before May 1. RXR will also invite some core franchisees to develop and meet the needs of the country. Standard new product.
As for the convenience stores that cooperate with RXR, "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 electronic cigarettes.”
In addition, this new regulation also has a relatively fine restriction that all future electronic cigarette products should have a safety lock function, that is, from the product point of view, to avoid the use of minors.
"This is not difficult to achieve technically, but before, more than 95% of electronic cigarette devices on the market did not have safety locks, which means that all brands need to reconstruct their products for future compliance operations." Zhao Yang Bo said.
Fang Hui said that Bode is now adjusting its inventory according to market demand.
"The new regulations have prompted some consumers to purchase in advance, and some users have purchased a large quantity. Bode needs to provide services for stores and users." On the other hand, Bode is preparing for the production of new products, and is also preparing for the upcoming The coming new era reserves people, money and things.
Zhang Yi believes that for the existing e-cigarette industry practitioners, they may face pain in the short term, the business model needs to be changed, the profit margin may also decline sharply, and the problem of user loss may occur immediately.
The regulations that do not allow the operation of specialty stores will also bring certain losses to the enterprises that invested in the construction of this channel at a high cost.
After the State Tobacco Monopoly Administration issued the "Administrative Measures" announcement and the "Second Draft for Comments", MOTI, YOOZ, Boulder and other e-cigarette brands also issued announcements saying that they will resolutely implement the management measures and actively implement supervision. It is required to stop the production of non-tobacco-flavored products for the domestic market and carry out production and business activities in accordance with the law.
However, Zhao Yangbo said that there are still some links to be clarified about the new regulations on e-cigarettes.
For example, which enterprises can really be approved by the state for production?
How is the tax paid?
0 Are nicotine products not included in the new regulations on e-cigarettes?
"There are also some companies that may use the same technical form of electronic cigarettes, but instead of nicotine, they inhale arecoline, which is similar to this electronic cigarette-like product called water betel nut, right? Will it be merged into regulation?"
It is of great significance to prevent teenage addiction, and it may be deployed overseas during labor pains
Since 2018, the state has introduced a series of regulatory measures for the electronic cigarette industry.
When talking about the background of the formulation of the "Administrative Measures", the State Tobacco Monopoly Administration stated that in recent years, due to the existence of regulatory gaps, the electronic cigarette industry has developed disorderly, especially some operators mislead consumers and induce minors to smoke. Violate the physical and mental health of minors.
There has been a strong response from all walks of life, and they have continuously called for strengthening supervision.
"The "Administrative Measures" is actually equivalent to applying the original set of management systems for traditional cigarettes to electronic cigarettes, from the source of raw materials of electronic cigarettes, to production, to circulation, to retail and other links. Live." said the above-mentioned scholar who has been concerned about the tobacco industry for a long time.
The "Administrative Measures" have greater significance for the protection of young people.
The World Health Organization issued a Weibo account affirming China's move 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 flavorings, and flavorings used to produce buttery flavors have been shown to cause bronchiolitis obliterans (commonly known as 'popcorn lung'). Flavorings are prohibited E-cigarettes are important in preventing teenage vaping and nicotine addiction."
In the view of the above-mentioned scholars, if there are no restrictions, the flavors of e-cigarettes can be unlimited, "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 working hard. The new regulations have high requirements on licensed companies on the production and manufacturing side. Only powerful companies can continue to stay on this track. It's a good thing for the e-cigarette industry where brands are fighting." Zhang Yi said.
Internet analyst Ding Daoshi also said, "In the past few years, many companies have been trembling because they are not sure whether this model is legal. Entering a new era of standardized development, for large and standardized brands and enterprises It's good. Before, the e-cigarette industry was mainly about efficiency, but in the future, its standardization and compliance will definitely be put first."
In Ding Daoshi's view, there are two main modes in the field of electronic cigarettes, one is a relatively lightweight operation mode, such as relying mainly on cooperative enterprises to produce pods, and the other is a heavier mode, where every link is as much as possible Control yourself.
"Both models have their own advantages and disadvantages. With the development of legalization and compliance in the industry in the future, if an enterprise has the ability to control more chains and has strong financial and channel support, its commercial value will increase in the future. stand out."
Yu Jinyong, managing partner of Zhongbei Meng Investment, believes that from the perspective of investment, there are not many opportunities for angel investment in this field. "The structure of electronic cigarettes is relatively simple, with chips, batteries, and other components. This part is relatively mature as a whole. The current policy is good for companies that can obtain licenses, but it may be difficult for a startup company to do these things now, unless it has some special functions, I think this kind of opportunity is already very good not enough."
"However, there may be opportunities for these funds or investments in the relatively later stages. If one or several such companies are selected, the returns will be good, especially those that can survive this short-term and medium-term bad situation in the long run. Enterprise." At the same time, Yu Jinyong mentioned that the export of electronic cigarettes will not be greatly affected.
"With legal status, exports may also become more compliant, and companies with licenses may receive better support." Another former investor also said, "The certainty is relatively high, the major brands All of them will increase their efforts to go to sea. Southeast Asia and the Middle East have already spread a lot.”
According to a previous report released by iiMedia Research, as of 2021, Chinese enterprises will account for more than 95% of the global electronic atomization production capacity, and they will be sold to more than 200 countries and regions.
Fang Hui is still full of confidence in the e-cigarette industry.
"Strict supervision is good for the industry in the long run. Although there will be great changes from products to channels, Bode firmly believes that China's electronic cigarette industry has great potential. Bode has reserved enough technologies and products to fully meet the requirements of the measures. ."
Zhang Yi believes that the ban on the sale of flavored products and the official exit of "steam juice" will greatly reduce the number of younger users. Electronic cigarettes will return to their original aspirations, with traditional smokers as the audience, and to provide smokers with alternative products that reduce scorch and harm. .
"With reference to the management of foreign markets, compared to the more popular atomized electronic cigarettes, the solid electronic cigarettes that are still in the incubation period may become a bright spot in the market."
"On the other hand, we also noticed that this management system will be officially implemented on May 1, and the transition period for the industry is actually short." iiMedia Monitoring data shows that currently, various types of e-cigarette stores in China5 Thousands.
"How they transform or adapt to the new regulations is a problem. For manufacturers, it takes time to develop and produce products that meet the requirements according to the new regulations, and it is a problem that needs to be clarified and clarified." 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, and then the competition may be the organizational and operational efficiency of enterprises, as well as foresight and technology research and development strength. We still compare confident."
Beijing News Shell Finance reporter Sun Wenxuan