According to data from the Vape Industry Committee of the China Electronics Chamber of Commerce, since the epidemic, the Vape industry at home and abroad has faced varying degrees of opportunities and challenges:
China: China is the global Vape production base, and smoking accessories alone account for 95% of the global share. The United States and the United Kingdom are the world’s first and second largest consumers respectively, and the most important consumers of Vape in China Asmodus vape mods. Domestic Vape companies have resumed work at the end of February, and basically resumed work at full capacity in March. During the epidemic, demand for overseas orders was strong, and the export value from January to April was estimated to be 10 billion yuan, which was the same as the same period in 2019, and achieved rapid growth in April. At the same time, many domestic Vape companies are also increasing investment, including product research and development and equipment investment, and are also stepping up to improve their own strength during the “special period”. We believe that this means that practitioners are optimistic about the future development of the industry.
United States: The United States is the world’s largest consumer market for Vape, accounting for more than 50% of the global share. It is the vane of the global Vape industry and the most concerned market for the industry. According to data from the Vape Technology Exchange Industry Association (VTA), the impact of the epidemic began in mid-March. The first is the slowdown in imports, which prevents distributors from shipping products. Among the 43 states that have implemented the “stay at home” restriction order, only 10 states have Vape retail stores still open, and 3 states only allow roadside delivery. However, it is also difficult for these stores to supply their own products. E-liquid manufacturers in the United States also converted their production lines to hand sanitizers to support the fight against the epidemic. In June, almost all states have resumed operations, and only some areas have not yet reopened. It is worth noting that, at the request of the VTA, the FDA’s PMTA deadline for Vape companies was extended from May 12, 2020 to September 9, 2020, buying time for Vape companies worldwide that intend to open up the US market. At present, China’s leading Vape companies such as McWell (the parent company Smolar has been listed on the Hong Kong stock market) and RELX are preparing for the PMTA.
United Kingdom: The United Kingdom is the most Vape-supported country in the world and the second largest country in China’s Vape exports. According to data from the UK Vape Industry Association (UKVIA), there are currently more than 3,000 Vape stores in the UK, an increase of 10% over last year. The British Vape retail store has suspended store services since March 24 and reopened in mid-June. Overall, total sales decreased by 30%-60%, of which open Vape product sales fell by 60%, but because many stores switched to online sales and provided distribution services, online sales increased by 1500%. In addition, due to the government’s subsidies, these stores have seen their profits rise despite the decline in turnover. UKVIA believes that the damage to the UK supply chain during the epidemic was mainly due to insufficient supply from China, which made them aware of the need to ensure a stable and secure supply chain with China.
Europe: According to data from the European Vape Association (IEVA), due to the epidemic, Vape stores in Germany and most European Union countries have been required to close since March, and they did not open until mid-May Asmodus-MTL-RTA. During the epidemic, due to the impact of Vape sales, wholesalers and factories were faced with inventory backlog and cash flow pressure; the Vape exhibition during the same period was also cancelled. At the same time, due to the government’s strict sanitation standards and rising freight costs, the overall product cost has risen by about 10%-20%. These costs are mainly borne by wholesalers, which has also kept the wholesale and retail prices stable. IEVA predicts that the European Vape market will grow by 8.0% in 2020. At present, open Vape products are still the favorite styles of European consumers. The Association believes that stable Vape consumers (including those who have converted from other products and experienced consumers) will be the main potential of the European market in the future.
New type of tobacco recent recommendations to focus on: international supply chain: Simer (the world’s largest manufacturer of atomization equipment); Yiwei Lithium Energy (holding Simer); Yingqu Technology (IQOS secondary supplier of precision parts). Domestic supply chain: Jinjia Co., Ltd. (together with Yunnan China Tobacco and Xiaomi Eco-Chain as the main channel for new tobacco products), Jiyou Co., Ltd. (layout for new tobacco research and development and industrialization), Dongfeng Co., Ltd. (shares and layout for new tobacco products), Shunhao Co., Ltd. (Two-pronged approach to the layout of cigarette cartridges and smoking accessories), Huabao shares and Huabao International (leading in the layout of cigarette flavors and new tobacco raw materials), China Bolton (acquired international Vape manufacturer Jirui).
Risk warning: new tobacco policy changes/technology development risks, sales/enterprise development is not as expected