Friday, April 19, 2024

2021 Q1 China e-cigarette industry development status and market research analysis report


Electronic cigarettes have become an innovative electronic consumer product, which is becoming more and more popular around the world. According to data from iiMedia Research, the size of China’s e-cigarette market in 2013 was 550 million yuan, and the market size increased to 8.38 billion yuan in 2020. The eight-year compound annual growth rate reached 72.5%. It is expected to exceed 100 in 2021 as 100 million yuan.

The potential users of e-cigarettes in China are large and the industry has a bright future

China’s e-cigarette market has expanded rapidly. The data shows that in 2013, the scale of China’s e-cigarette market was 550 million yuan, and by 2020, the size of China’s e-cigarette market will increase to 8.33 billion yuan, with an eight-year compound annual growth rate of 72.5%. IiMedia Consulting analysts believe that the current scale of Chinese smokers ranks first in the world, but the penetration rate of e-cigarettes is less than 1%, indicating that China’s e-cigarette industry has a broad development space. The market size is expected to exceed 10 billion yuan in 2021.

E-cigarette users are mainly young and middle-aged men, and smoking cessation is the main purpose of use

According to survey data from iiMedia Research, in 2021Q1, Chinese e-cigarette users are dominated by men, accounting for 64.9%; the age group is mainly young and middle-aged, accounting for nearly 70%. More than half of users believe that e-cigarettes can relieve their dependence on nicotine and smoke, and the diversified taste of e-cigarettes is also an advantage to attract users. In addition, battery life, convenience of oil change, and price are the main directions that users expect to improve e-cigarette products.

Heat-not-burn electronic cigarette has obvious advantages and is expected to become a new growth point in the industry

Heat-not-burn e-cigarette devices are products that are less harmful than traditional tobacco and have the closest taste, and are popular among users. Survey data from iiMedia Research shows that in February 2021, 35% of Chinese e-cigarette users prefer heat-not-burn e-cigarettes. User demand promotes the development of the product market. It is estimated that China’s heat-not-burn e-cigarette market will reach 2.30 billion yuan in 2021.

Market scale analysis of China’s e-cigarette industry from 2013 to 2021

Data show that in 2013, China’s e-cigarette market was 550 million yuan, and the market size increased to 8.38 billion yuan in 2020. The eight-year compound annual growth rate reached 72.5%. It is expected to exceed 10 billion yuan in 2021. China’s e-cigarette market The scale has expanded dramatically. IiMedia Consulting analysts believe that the scale of Chinese smokers ranks first in the world, but the penetration rate of e-cigarettes is only 0.6. The successive promulgation of tobacco control regulations across the country is also expected to accelerate the increase in penetration rate. Therefore, as the penetration rate of the e-cigarette market increases in the future, the scale of China’s e-cigarette market is expected to increase substantially.

Analysis of the number of enterprises in China’s e-cigarette industry in February 2021

The vast market development space of e-cigarettes has attracted many companies to enter the market. Data shows that China’s e-cigarette companies have grown rapidly from 45,457 in 2013 to 168,452 in 2020. As of February 4, 2021, there are 174,399 remaining e-cigarette companies in China. . From the perspective of growth rate, the growth rate of the number of Chinese e-cigarette companies is accelerating. The growth rate will reach 30.27% in 2020, and continue the rapid growth momentum. It is foreseeable that the number of industry companies will continue to increase significantly in the future, and the industry track will more be crowded.

Jinjia shares, a typical upstream e-cigarette industry enterprise: profitability

In 2019, Jinjia shares achieved operating income of 3.99 billion yuan, a year-on-year increase of 18.4%, maintaining three consecutive years of accelerated growth; net profit for the year reached 880 million yuan, a year-on-year increase of 21%. In the first three quarters of 2020, the company achieved revenue of 3.01 billion yuan, an increase of 4.5% compared to the same period of the previous year. The business expansion in 2020 has slowed down; during this period, the company’s net profit experienced a negative growth of 660 million yuan, compared with the previous year A decrease of 1.6% during the same period. The main reason for the decline in performance was the outbreak of the epidemic in the first quarter. The comprehensive unfavorable factors caused by the epidemic caused the company’s various businesses to have varying degrees of stage delays. As the China epidemic was effectively controlled and the company’s tobacco industry has made good progress, and the company’s overall operating conditions are in a steady state.

Analysis of driving factors of Chinese e-cigarette consumers in 2021Q1

The reasons why consumers choose e-cigarettes mainly focus on health and environmental protection, such as helping to quit smoking and quitting reactions. The data shows that “can alleviate dependence on nicotine”, “have many tastes” and “can reduce smoking withdrawal response” are the main reasons for attracting consumers to use e-cigarette products. The three accounted for 55%, 46%, and 38%. IiMedia Consulting analysts believe that e-cigarette brands tend to highlight the functions of e-cigarettes in terms of health and environmental protection when promoting products, and e-cigarette merchants can also highlight the characteristics of the product’s taste and make it a product selling point.

2021Q1 China e-cigarette product experience problem perception analysis

The data shows that the biggest concern of e-cigarette users when using products is the short battery life (46.8%), followed by continuous high temperature, poor material quality, oil leakage and battery short circuit. IiMedia Consulting analysts believe that at present, the country does not have relevant standards to define the nature of e-cigarettes, and product positioning can easily become an obstacle for consumers to use products. In addition, the development of the industry is still immature, the market lacks companies with outstanding comprehensive strength, has not formed a brand with a good reputation, and consumers lack confidence in product quality assurance.

Distribution of Chinese respondents’ willingness to recommend e-cigarette products in 2021Q1

Data shows that more than half of the interviewed users believe that e-cigarettes have a smoking cessation effect, and 54.1% of users said that they would recommend e-cigarette products to others, with a high willingness to recommend. On the whole, the proportion of users who choose to recommend among the interviewed users is relatively consistent with the proportion of users who agree that e-cigarettes have smoking cessation effects, and both are more than half. This shows that smoking cessation effects are the premise for users to recommend products.

Wuxin Technology: Analysis of Typical Examples of Chinese Electronic Cigarette Enterprises: Enterprise Introduction

Founded in 2018, Wuxin Technology is a leading electronic atomizer company in China; the company has opened more than 2,500 specialty stores nationwide and settled in more than 100,000 retail stores; and opened 8 specialty stores in Canada, Indonesia and other countries Stores, customers in more than 40 countries and regions around the world.

Smoore International: Enterprise Introduction

Smoore International Holdings Limited was established in 2009 and is a global leader in providing atomization technology solutions; according to Frost & Sullivan’s 2019 report, the company is currently the world’s largest manufacturer of electronic atomization equipment. In 2015, the company launched its own brand Vaporesso in the United States and expanded the market to Europe and Japan. In 2016, it launched the first generation of ceramic heating technology and applied it to its brand FEELM.

Intre Technology: Enterprise Introduction

Based on the independent innovation UDM model (also known as the ODM intelligent manufacturing model), Intre Technology mainly provides customers with the development and production of intelligent control components, innovative consumer electronics and other products, and provides intelligent manufacturing solutions for small and medium-sized enterprises. The company is also a secondary supplier of HNB electronic cigarette giant IQOS. It mainly provides plastic components such as charging boxes (MU) and heating rods (TSH), and provides assembly parts for IQOS’s primary suppliers Venture and Flex.

Development trend analysis 1: Industry regulatory policies become stricter

In November 2019, relevant state departments began to tighten the control of e-cigarettes. The introduction of the ban on online sales of e-cigarettes caused major e-commerce platforms to remove e-cigarette products overnight. Before the online sales channel was cut off, e-cigarette brands used online channels for shipments, which could avoid profit sharing among stores and distributors and reduce product costs. Therefore, under the influence of the ban, e-cigarette companies can no longer conduct online marketing, and the effect of publicity has been greatly reduced. At the same time, standards have been introduced in various places, which has ushered in a fierce reshuffle of electronic cigarettes.

Development Trend Analysis 2: Overseas Expansion of Electronic Cigarette Companies

With the strengthening of online sales regulation, some e-cigarette companies have begun to expand overseas. On December 5, 2019, Doo, a domestic e-cigarette brand, and Indigo, an e-cigarette distributor under the Kali Group of the United States, stated that they would establish a joint venture in the United States. In the same year, RELX also started to go overseas and achieved better performance in a short period of time. IiMedia Consulting analysts believe that e-cigarette companies going overseas is a good strategy to avoid policy risks, but they will also face different regulatory policies, cultural differences, environment, and youth addiction. Therefore, companies need to carefully study the domestic market and overseas The difference in the market will accurately position the brand strategy and lay a solid foundation for the future global market layout.

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