The E-cigarette market in China is still very small. In 2018, the market size is only $744 million comparing to the sales of the entire traditional tobacco $1.3 trillion will have great potential in the future.
The upstream of the industrial chain is mainly the manufacturer of E-cigarette accessories. Midstream enterprises are mainly design and manufacturing enterprises. The downstream channels include online sales and offline sales, but mainly through online sales.
The entire industry policy is still unclear at this stage, but it is expected that the national standard for E-cigarettes will be launched before the end of this year. The entire industry has a unified industry standard, which is conducive to the E-cigar industry to go on track.
Upstream industry chain company – Vaporesso: mainly produces and sells atomizer products and ODM business, relying on overseas sales revenue to support business development. In 2018, the overseas revenue contribution rate reached 88.1%. According to the product line, electronic atomizer sales The revenue contribution rate reached 72.57%. The company’s ODM foundry business contributed about 70% of the sales revenue. The company’s own brand products are Vaporesso’s long-term development strategy, and its sales revenue contribution has reached 30%. The company has good research capabilities, and its research and development costs and research results are growing rapidly, but in the future, in order to ensure research and development capabilities, more researchers need to be recruited.
Mid-stream enterprise in the industry chain – Sigelei: It mainly produces and sells electronic cigarettes and its accessories business. It has specialized in international commerce companies. Its sales revenue is mainly contributed by overseas sales. In 2018, the sales contribution rate reached 91.79%, but due to the increase in competition and the impact of Sino-US trade war, the company’s price cuts, gross profit margins continue to decline, the Sigelei offline experience stores are mainly in the southeast coast and central regions and the southwest region, now there are at least 41 offline experience stores, JD and online Tmall flagship store, its distribution logistics service satisfaction is relatively high, the E-cigarette kit core products are sold in two stores, but in different stores sell different products of vape oil, accessories products
At this stage, consumers’ awareness of E-cigarettes has greatly increased. The number of people who know and use E-cigarettes has increased, and most of them are purchased through Internet channels. At present, E-cigarette users are mainly between 26-35 years old. Young people who are pursuing fashion and a healthy pursuit of middle-aged people between the ages of 36 and 45 are also consumers of E-cigarettes, of which men account for 68%, which is still the main group of E-cigarette consumption.
Key risks of E-cigarette industry, excessive industry participants, low social awareness, and medical health risks
Opportunities in the e-cigarette industry are mainly in the early stage of the market, and there is no fixed market structure; users are younger and more likely to accept new things; tobacco products are profitable; e-cigarettes have high levels of capital attention, and companies are more likely to finance expansion.