On October 1, the two major regulatory measures of e-cigarette management and e-cigarette mandatory national standards came into full effect and implemented, the whole industry chain implemented licensed operation, and the industry ushered in a new era of compliance. Customers can buy GB products in licensed e-cigarette stores, including cigarette sticks with children's locks, tobacco-flavored cartridges in line with the national standard, disposable e-cigarettes, tobacco sets, and fruit-flavored e-cigarettes have since withdrawn from the Chinese market.

According to the reporter's understanding, up to now, nearly 400 e-cigarette supply chains, brands, and overseas export enterprises have obtained e-cigarette production licenses, including nearly 40 e-cigarette brands. These 40 brands have at least 51 cigarette sticks and at least 100 cigarette cartridges, which can be sold through the national unified e-cigarette transaction management platform. In addition, 54706 e-cigarette retail licenses will be planned and distributed nationwide.

Merchants: short-term "lie flat", long-term "taste is the key"

Thanks to the six-month policy buffer period, upstream e-cigarette manufacturers have stopped producing fruit-flavored e-cigarettes in recent months, and fruit-flavored cartridge stocks have been gradually sold out.

A person in charge of an enterprise who has obtained an e-cigarette production license said that from the point of view of e-smokers around him, the proportion of e-smokers who accept the national standard tobacco taste is less than 30%. They have recently hoarded some fruit-flavored e-cigarettes, and they may quit smoking later or rejoin the cigarette camp.

According to the feedback from the e-cigarette retail owners interviewed by the reporter, for the national standard tobacco-flavored e-cigarettes, about 10 boxes can be sold in 1.1 days, and not even one box can be sold in two weeks. A number of e-cigarette retail owners generally reflect that the repurchase rate of national standard tobacco-flavored e-cigarettes is not at all the same level as fruit-flavored e-cigarettes.

In this regard, senior e-cigarette industry personage, blue hole new consumer editor-in-chief Chen Zhong believes that the repurchase rate of the first batch of GB products is expected, because the first batch of GB examination is very strict, enterprises in order to pass the examination smoothly, will be very cautious in the taste addition, after the audit is slightly relaxed, the taste should be much better.

A number of shopkeepers said they had no expectations for short-term sales. First of all, the repurchase of tobacco-flavored e-cigarettes is poor. After the full removal of fruit-flavored e-cigarettes, the turnover will at least fall by more than 50%, 70% or even 90%. Secondly, in the next 3-6 months, as many users have stored a lot of fruit-flavored e-cigarettes, these users will give priority to consuming the stored fruit-flavored e-cigarettes and will not be interested in the GB tobacco flavor for the time being.

Everyone's expectation for the future is to hope that the brand can launch a taste that is in line with the national standard and acceptable to e-smokers in order to usher in the inflection point of sales. "there will be an impact in the short term, but in the long run, the elimination of WeChat merchants and online sales is good news for licensed brick-and-mortar stores. In the past, there were about 50,000 specialty stores and more than 200,000 retail outlets, but now there are only more than 50,000 licenses. As long as the products can get up, we are still more confident. "said one shopkeeper.

Xiao Xu, a smoker with a long history of electronic cigarettes, told reporters that after compliance, in addition to fewer taste choices, the quality has been well guaranteed. As the purchase channels of all commodities in the future will come from the national unified e-cigarette trading management platform, the behaviors such as serial goods, fake goods and disorderly prices are controlled from the source, and the whole chain is licensed, "I will no longer worry about whether I smoke fake or shoddy products." "

Manufacturer: power overseas market

"I am now focusing on the export market. Overseas sales account for more than 90%, while sales in the domestic market account for single digits. I have not received any orders from domestic brands since the second half of September. Mr. Lin, head of a tobacco oil company in the Pearl River Delta, told reporters that before, his company's domestic sales accounted for about 40%. With the landing of a series of domestic regulatory rules, he realized that the domestic market might face shocks in the short term. Therefore, he quickly turned around to increase sales in overseas markets. Thanks to the growth of overseas markets, sales this year are not expected to decrease compared with last year.

According to the latest financial report from Seymour, a leading contract manufacturer of e-cigarettes, nearly 70 per cent of the company's revenue in the first half of 2022 came from overseas markets. In 2021, Chinese mainland accounted for 40.2% of its revenue, and with the introduction of domestic regulatory policies in the industry this year, its performance growth will mainly come from overseas markets.

In the US market, with its leading position in technology and manufacturing, Seymour has become the atomization technology manufacturer with the largest number of customers passing PMTA (Tobacco pre-Market Review) in the ENDS (atomized / steam e-cigarette) category. In Europe and other overseas markets, the company's revenue grew rapidly in the first half of the year, up more than 42% from a year earlier. The relevant person in charge of Si Moore said that the new one-off business category has been shipped smoothly in the European market, and customers will continue to distribute the EU and overseas emerging markets in the second half of the year, which is expected to bring considerable overseas revenue growth in the second half of the year.

However, the development of overseas markets is not flat.

"overseas is very popular now, especially in Southeast Asia. Our company has simply abandoned the Southeast Asian market, and its main competitors are all domestic counterparts in the past. After strict supervision at home, everyone rushed out, resulting in fierce overseas competition. "Mr. Lin said.

Going out to sea is not only the active choice of some enterprises, but also the choice that some enterprises must not take. According to the notice on strengthening the supervision of e-cigarettes issued by the State Tobacco Monopoly Bureau on September 28, the main body of the e-cigarette market engaged in the production and operation of e-cigarettes should obtain a tobacco monopoly license from October 1, and as of the latest, only 40 e-cigarette brand products have passed the compulsory national standard technical evaluation of e-cigarettes or obtained the e-cigarette production license, which means that the vast majority of enterprises have not yet obtained the license. At this stage, if we want to maintain production and operation, we can only go to sea.

Chen Zhong said: at present, more than 50 countries and regions in the world have included e-cigarettes under the control of tobacco products, more than 40 countries and regions have banned the sale of e-cigarettes, and some places, such as South America, Africa, the Middle East, and so on, have potential. Of course, there are many challenges to go overseas, and you need to be familiar with the local environment, regulations, and users, and the global policies and regulations on e-cigarettes are gradually tightening. "this business may not be so profiteering in the future, but will return to a rational and normal level." at this point, overseas enterprises should also be psychologically prepared. "

Head brand is expected to expand its advantage

On the evening of September 19, Xiao Song announced that Guangdong Jinlaite Intelligent Technology Co., Ltd., a wholly-owned subsidiary of the company, had received the Tobacco Monopoly production Enterprise license issued by the State Tobacco Monopoly Bureau to produce and sell e-cigarette related products in accordance with the law. On the eve of the official implementation of the national standard for e-cigarettes on October 1, the company officially obtained the "ticket" to carry out e-cigarette business in compliance with domestic regulations.

Xiao Song shares said in the announcement that as an important platform of the company's new tobacco industry chain, Golden Wright Intelligence will rely on the accumulated comprehensive advantages of resources, technology and team within the scope of the license. To provide customers with e-cigarette sets, cigarette cartridges and other products production, processing services, is expected to have a positive impact on the company's future business performance.

On September 20th, Epp announced that the company plans to increase capital in Shenzhen Yingcan Biotechnology (hereinafter referred to as "Shenzhen Yingcan"). Lei Yan Technology, the controlling shareholder of Shenzhen Yingcan, owns the "Magic Di MOTI" electronic atomization brand. Epp shares said that the company plans to acquire Yingcan's controlling stake in Shenzhen by paying cash for capital increase. In the future, it will use new tobacco core materials as a breakthrough, strengthen the coordination of product planning and market layout, strengthen research and development, and seize new opportunities for the development of the industry. According to the data, the magic flute is on the list of license enterprises of newly completed tobacco monopoly production enterprises.

In addition, among the A-share listed companies are BYD, Jinjia shares, Shunhao shares, Dongfeng shares, Jinlong Mechatronics, Jincheng Pharmaceutical, and so on, which have been "licensed" through their companies, involving the production, sales, import and export of e-cigarettes.

It should be noted that these companies have not recently entered the e-cigarette industry, but have long been laid out before. most of them are mainly involved in a certain link of the supply chain, and they seize the short time window of the transition period to apply for a production and operation license. it means that priority is given to admission qualifications and products and services can be provided in compliance. As most of the company's main business is not in the new tobacco, it will not have a great impact on the company's performance and industry.

"what really affects the pattern is the listed companies that specialize in e-cigarettes, such as Si Moore in Hong Kong stocks and RLX Technology Inc. in US stocks. Chen Zhong said.

Chen Zhong believes that after the new compliance, the entry threshold for e-cigarette enterprises has been greatly raised, and so far less than 400 have obtained production licenses, compared with tens of thousands of e-cigarette enterprises in Shenzhen before. it means that a large number of small factories that do not have qualifications, do not meet the requirements of the national standard and do not meet the regulatory requirements will withdraw from the e-cigarette market. Only from the perspective of domestic production capacity, the production capacity provided by these licensed enterprises can already meet the current demand at this stage, and if there is more, it will produce new volumes.

Of the nearly 400 subjects who have obtained production licenses, 40 are e-cigarette brands. Chen Zhong believes that the competition among brands will be more fierce, because the existing sales method is through the national unified e-cigarette transaction management platform, which has nothing to do with all brands in the channel, so whether the future products and designs can impress users or whether they can establish brand loyalty in the hearts of users is the key to the competition. "in particular, what about many small brands that have not been known before? I think it's a test for them. My personal judgment of the brand, next year may only be left half, a little more pessimistic, or even ten can be considered good. "

Galaxy Securities, China Merchants, Caitong Securities and other institutions have said in the research report that with the raising of the production and sales threshold, the industry will concentrate on the head, and the report end of the industry is expected to improve significantly after the labor pain. the domestic e-cigarette market will also enter a stage of steady expansion.