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The countdown sign appeared in the circle of friends, starting 9 days ago. Today, finally counted to 0.
Just like the college entrance examination tomorrow, the electronic cigarettes without fruit-flavored pods will have a big test in a few hours-does the market accept the only tobacco-flavored pods? Are sales up or down? How do consumers choose?
The State Tobacco Monopoly Administration issued the “Measures” for electronic cigarettes, stipulating that from October 1, the sale of fruit-flavored pods will be completely banned.
“The madness of electronic cigarettes is almost over.” The dealer Zhao Tong said that he made his own judgment.
He checked the delivery list, and there were 12 boxes of fruit-flavored pods left in his hand. He sighed: “Keep it for yourself, after all, this thing will be considered a ‘contraband’ in the future.”
In the whole month of September this year, almost all the topics in the e-cigarette industry revolved around “fruit-flavored pods”. The “Research Report on E-Cigarette Marketing and Its Impact on Adolescent Health” released by Fudan University pointed out that the most attractive young people The most popular flavors of e-cigarettes are fruit flavors, followed by food and beverage flavors.
However, after the disappearance of the fruit-flavored pods, the electronic cigarettes ushered in the real ultimate test – the feelings of loss, joy, loss or helplessness of different roles of distributors, agents, manufacturers, and it seems that in this last time, they are more able to Describe a real, changing e-cigarette market.
Capital markets have been the first to respond.
As of the close on September 29, A-share e-cigarette related sectors closed down 0.19%, of which Shunhao shares and Huabao shares both fell significantly; Hong Kong stocks Smol International closed down 5.24%, BYD Electronics closed down 3.32%, and China Bolton closed down Down 3.7%; U.S. stocks Fog Core Technology fell 2.83%.
The fruit pods are gone
On September 30, Zhao Tong kept himself at home, and his e-cigarette shop was about to close.
The New Deal is about to be implemented, but he has not obtained a tobacco certificate issued by the Tobacco Administration. In April of this year, Zhao Tong submitted the application materials for the tobacco license to the Tobacco Bureau, and was later returned, on the grounds that “the registration does not match the actual business address”.
In the previous March, he had already felt a surge in the field of electronic cigarettes.
At that time, the State Tobacco Monopoly Administration issued the “Administrative Measures for Electronic Cigarettes” and “National Standards for Electronic Cigarettes”, proposing that starting from May 1, the sale of flavored electronic cigarettes other than tobacco flavors and electronic cigarettes that can be added to their own vapors will be completely banned. Subsequently, the lock-up period was extended to October 1.
What does it mean to have no fruit-flavored pods?
For e-cigarette companies in the entire market, giving up the production of fruit-flavored e-cigarettes means losing nearly 90% of their product categories. Blue hole new consumer research data shows that most consumers buy e-cigarettes only Choose non-tobacco flavored products, which often account for more than 90% of sales.
The “Measures” also clearly stipulates that e-cigarette market participants need to operate with licenses, and e-cigarette factories, atomizers, and nicotine manufacturers and brands must start R&D and production in strict accordance with national standards. For certified merchants, the last day of September may be the last day for the store to open.
However, during the 5 months that the ban on fruit-flavored pods was extended, Zhao Tong still seized the opportunity-he took the plunge and bought three batches of fruit-flavored pods with 100,000 yuan, and these pods were released on September 30. Almost all were sold.
But such luck is not common, and fruit-flavored pods do not have to worry about selling, but as the ban on sales approaches, tobacco in electronic cigarette shops has become a scarce commodity in the industry – data shows that the country will plan to deploy 54,000 electronic cigarettes Retail licenses, but limited quantities per lot.
According to Zhao Tong’s inquiries, there are only about 1,000 tobacco licenses in the entire Anhui Province, and Hefei, as the provincial capital city, has been assigned “no more than 400 copies” – and according to the data he has, the scale of electronic cigarette shops in Hefei far exceeds that of tobacco licenses. quantity.
Zhao Tong’s previous family, Xu Jin, a former city-level agent, has now resigned from his job as an agent, and has obtained a tobacco license to run several regular electronic cigarette shops.
“In the past, e-cigarettes were sold in fruit flavors, and the volume of tobacco-flavored cigarettes was very small, that is, one-tenth of the fruit pods. Why? Because you smoke tobacco-flavored e-cigarettes, why don’t you just smoke cigarettes? .”
But now, Xu Jin must and can only embrace tobacco-flavored pods.
Even more unaccustomed to the frequency with which he answers the phone. Before, his “mobile phone was plugged in and used as a landline”, and he made hundreds of calls a day, but now on September 27, during the half hour of our chat, Xu Jin’s business phone was silent. ring.
Almost no merchants consulted Xu Jin at this time, “E-cigarette merchants all over the city know that even if they get fruit-flavored pods at this time, they can hardly make any money.”
On September 27, the fruit-flavored pods of a leading e-cigarette company on the market in Hefei cost 68 yuan for a box, and usually a minimum of 40 yuan can be obtained. Xu Jin said. “In addition to logistics, various costs that usually seem insignificant, and discounts for old customers, there are actually very few people who make money in the end, so there is no need to get the goods.”
“Next, we actually manage the electronic cigarette market with the number of ways in the cigarette market. The price of tobacco-flavored pods is not low, and now we have to increase taxes. If you don’t count the discounts for old customers, a box of pods will cost you a lot of money. The profit is only 20%, do you think 20% is very high? In the past, when selling fruit flavors, the profit could be as high as 60%.”
Under the premise of the gradual disappearance of fruit-flavored pods, whether tobacco-flavored pods can support the huge profits of electronic cigarettes is unknown to all aspects of electronic cigarette factories and suppliers.
what to do
Lao Xie knew the situation of Xu Jin and Zhao Tong.
He is the sales executive of a well-known domestic e-cigarette brand. On the morning of September 27, he communicated with the relevant personnel of the Tobacco Bureau to confirm the issuance of the license plate, the setting of the content of the new publicity posters, the situation in each region, and the national sales statistics during the upcoming National Day holiday.
At the end of the meeting, he called the company’s leaders and reported the relevant situation, while the production line on the other side would decide to increase or decrease production according to the meeting and future results.
For enterprises, preparations for “taste change” and “certificate employment” in the domestic e-cigarette market have started a few months ago.
Lao Xie revealed that the e-cigarette company he worked for set up a special group to communicate with the Tobacco Bureau after the “Measures” were issued in March this year, to be responsible for the application of licenses and other documents and related work.
From the perspective of the entire industry, according to statistics from the website of the State Tobacco Monopoly Administration, as of September 28, a total of 385 e-cigarette-related companies have obtained tobacco monopoly production licenses, of which 6 are nicotine manufacturers for e-cigarettes, 40 One is an atomizer manufacturer, and the rest are e-cigarette manufacturers, including brands and OEMs.
The situation of enterprises that did not get a license is slightly “sad”.
On September 30, an e-cigarette company called “Not Me” was rumored to be on vacation for two months and paid the minimum standard salary, and the reason may be related to the delay in obtaining the e-cigarette license.
Lao Xie’s e-cigarette company, after applying for a license, started countermeasures in the face of future market changes. They even abolished the entire department responsible for private domain traffic.
Before, wechat merchants that controlled private domain traffic have always been a secret door for e-cigarette companies, and they are also the most important shipping platforms from agents to merchants-especially after October 2019.
On October 30, 2019, the State Administration for Market Regulation and the State Tobacco Monopoly Administration jointly issued the “Notice on Further Protecting Minors from Electronic Cigarettes”, requiring a complete ban on the sale of electronic cigarettes and related products on major e-commerce platforms and small programs. product.
Since then, e-cigarette companies have turned traditional online channels to focus on micro-business sales.
In fact, Lao Xie believes that in the future, there will be micro-businesses selling fruit pods of the current brand privately, but at the same time, the total number of fruit-flavored pods that have been discontinued is limited. With the end of the clearance, there are absolutely no fruit-flavored pods to sell on the market – and it is difficult for e-cigarette micro-businesses to survive.
“The rules have changed now. Let me use an analogy. Have you ever seen a micro-business selling regular cigarettes from the Tobacco Bureau?”
But e-cigarette sales have not been halted by the discontinuation of fruit-flavored pods. At 7:00 p.m. on September 27, Lao Xie was still working overtime.
Previously, the national unified e-cigarette transaction management platform resumed ordering services on the 26th after suspending services for a week, while Lao Xie kept updating monitoring data and understanding the needs of different places through feedback from merchants.
“We previously predicted that the cancellation of fruit-flavored pods would cause the retail sales of e-cigarettes to drop by 80% and shipments to drop by more than 70%, but as a company, we must save ourselves. We have a plan very early to establish an overseas market.”
Industry change
Of course, this is an inevitable pain, but it is not a new round of opportunities.
Relevant reports show that a number of institutions, including Galaxy Securities, China Merchants Securities, and Caitong Securities, have stated in research reports that with the increase in production and sales thresholds, the industry will focus on the head, and the reporting end is also expected to welcome the industry after the pain period. The domestic e-cigarette market will also enter a stage of steady expansion.
Now, products that meet the new national standard have been quietly put on the shelves. Taking RELX as an example, in terms of cigarette rods, it has launched the national standard product phantom “Xinghe Dream” atomizing rod, and in terms of pods, it has launched the phantom “Wangjiang Youjing Mountain Grill 25” and the phantom “Forest Fuxing Mountain Grill 53”. Atomized bombs.
In addition to the changes in the appearance of the new cigarette rods, except for the two rows of big characters, “Dissuade young people from smoking electronic cigarettes and prohibit primary and secondary school students from smoking electronic cigarettes” and “Our company reminds that smoking electronic cigarettes is harmful to health, please do not smoke electronic cigarettes in non-smoking places”. The biggest difference is the addition of a child lock function.
On the one hand, the company is launching new products in an all-round way to adapt to the new market. At the same time, many e-cigarette-related companies are also deploying overseas. Although Lao Xie is not in charge of the company’s overseas business, he admits that he is doing a good job.
“Many domestic e-cigarette manufacturers have moved to foreign markets or OEM since October 2019. The way of playing in foreign markets is completely different. There are no micro-businesses, and many channels are unfamiliar to us, but Chinese e-cigarette companies do not bad.”
The “Blue Book of Electronic Cigarette Industry Exports in 2022” shows that the global electronic cigarette market will exceed US$108 billion in 2022, and the total export value of electronic cigarettes in China will reach 186.7 billion yuan, with a growth rate of about 35%.
The market may still be broad, the only difference is that fruit pods will be withdrawn from the e-cigarette arena.
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