On May 1, the "Administrative Measures for Electronic Cigarettes" (hereinafter referred to as "Administrative Measures") will be officially implemented. From November 26, 2021, after e-cigarettes were clearly regulated as a new type of tobacco product in accordance with the "Regulations on the Implementation of the Tobacco Monopoly Law of the People's Republic of China", the "Administrative Measures for E-Cigarettes" and "E-Cigarette Standards" have successively issued drafts for comments.

On March 11, the "Administrative Measures for Electronic Cigarettes" officially came into effect, and the "Standards for Electronic Cigarettes" solicited opinions for the second time, which ended on March 17. According to industry insiders, this week or next week, the "Standards for Electronic Cigarettes" that have entered the review period are likely to be officially released as a supporting measure to the "Administrative Measures".

Compared with the time when the opinions were solicited, the biggest shock to the electronic cigarette industry brought by the officially promulgated "Administrative Measures" is: "It is forbidden to sell flavored electronic cigarettes other than tobacco flavors and electronic cigarettes that can be added with atomizers." This means , The popular fruit-flavored pods such as green bean paste, mojito, and vanilla will be delisted after May 1.

Some are happy and some are sad.

Some e-cigarette shop owners are worried about their livelihoods after May 1, while micro-businesses are cheering, preparing to make a fortune by hoarding goods in the end. As for tobacco-flavored e-cigarettes, everyone seems to have little confidence.

"It is clear that the domestic market of the electronic cigarette industry will be greatly squeezed, and going overseas is a choice that it has to make, and it is a relatively favorable direction." Chen Zhong, the editor-in-chief of Blue Hole Consumer, analyzed that the existing electronic cigarettes 80% of specialty stores will have to "find another way", but the optimistic estimate is that the layout of e-cigarette retail stores will likely become a self-contained system, and the road has not been "blocked".

01 The "disappearance" of fruity pods

According to the reporter of "IT Times", an electronic cigarette brand in Shenzhen is stepping up the production of fruit-flavored pods. It is expected to stop production on April 30. According to the monthly shipment of 70 million to 80 million, there are still nearly 30 million boxes. of shipments. But on the market side, the price of fruity pods is rising. A price list obtained by the reporter shows that the wholesale price of ordinary fruit-flavored pods has increased by 15%-20%, while the wholesale price of some best-selling flavored pods has exceeded the retail price of 99 yuan per box.

"If there is no fruit flavor, I may return to the embrace of traditional tobacco." "The time to quit smoking has come. Without fruit flavored pods, I will quit smoking completely"... Although the "disappearance" of fruit flavored pods As a result, the answers given by many interviewed e-cigarette smokers are quite different, but the verifiable reality is that fruity flavor is one of the most important reasons for smokers to smoke e-cigarettes. Some dealers told reporters that fruit-flavored pods accounted for at least 90% of the total shipments.

In other words, many non-smokers come into contact with e-cigarettes because of their fruity flavor. Especially for women, the sweet and fruity e-cigarettes are far less heavy than the psychological burden caused by traditional tobacco.

This is also where smoking cessation organizations have been criticizing e-cigarettes: although compared with traditional tobacco, it has a harm reduction effect, but at the same time it may expand the group of smokers, including women and even minors.

Compared with the first draft for comments, the second edition of the "E-Cigarette Standards" has made major changes in the additive category table for comments. Chen Zhong believes that according to the new white list of additives, the flavors of e-cigarettes in the future will be flavored tobacco flavors. Mainly, such as lemon tobacco flavor, floral tobacco flavor and so on.

"The new round of research and development of pods will focus on the flavoring of tobacco flavor, which has not been valued in the past." An e-cigarette business person said that despite this, the overall market for e-cigarettes will inevitably shrink.

02 "0 Ni nebulizer" may become a new direction

As early as last year, when the first wave of regulatory boots for e-cigarettes landed, some people speculated that since the regulators defined e-cigarettes as "nicotine-containing (nicotine)" smokable vaping products, nicotine-free vaping products may be. Become the transformation direction of electronic cigarette enterprises.

Sure enough, at the beginning of this year, e-cigarette company Weike proposed three major business directions for 2022: domestic nicotine business, domestic herbal atomization business and overseas nicotine business, especially herbal atomization business, which will be one of the major directions this year. breakthrough.

The logic of switching from electronic pods to herbal vaping liquids is simple and straightforward. The nicotine-free vaping rods and liquids are similar to electronic cigarettes in terms of product form and usage. For some people who smoke electronic cigarettes just because of curiosity and taste For new smokers, no more market education is needed. From the market price point of view, herbal atomizing liquid is even slightly higher than that of pods.

The reporter saw on e-commerce platforms such as JD.com that the price of a herbal atomizing liquid bomb is about 40-45 yuan, which is about 20% more expensive than ordinary pods.

More importantly, after May 1, e-cigarette channels that have not applied for a tobacco retail license will be required to be closed. Even if a license is obtained, it is no longer allowed to only be a store of a certain brand, but must be a multi-brand joint store. For the e-cigarette companies that have invested heavily in the establishment of channels, the sales collection store is equivalent to the waste of the previous investment. If the "0 nicotine" nebulized liquid can successfully take over this blank market, the entire channel system will not fall apart immediately.

But this is only the ideal state. It is worth noting that the revised "Administrative Measures for Electronic Cigarettes" will replace the electronic cigarette processing enterprises that were originally solicited with "atomizer manufacturers", which adds a touch to the future of "atomizers". Uncertainty from regulators.

"One of the key issues with nebulizers is safety. The safety of many additives has only been verified in food additions, but if it is inhaled by the human body through the respiratory tract after nebulization, it is still inconclusive." Chen Zhong believes that this is also the case. Transforming "0 nicotine atomized liquid" enterprises are likely to encounter "pits".

03 The tragedy of the transformed channel

In addition, although there were many changes when the "Measures for the Administration of Electronic Cigarettes" was finally announced, it was very clear from the beginning that the production, wholesale and retail of electronic cigarettes should be managed by the State Tobacco Monopoly Administration. To the tobacco monopoly license, no clear rules have been issued so far.

There has been a pessimistic view that the possibility of existing e-cigarette dealers obtaining a license is very low, and according to the "Administrative Measures", the layout of sales outlets must also be approved by the regulatory department. It seems that traditional tobacco channels take over e-cigarette sales. more likely reality.

Chen Zhong believes that the issuance of e-cigarette retail licenses is likely to be self-contained and not mixed with the layout approval of traditional tobacco retail stores. It is also the situation that these dealers are opening up step by step.”

It can be proved that the "Administrative Measures" for "obtaining a tobacco monopoly retail license to engage in electronic cigarette retail business" are all based on "electronic cigarettes" as a prerequisite, such as "conforming to the reasonable layout of local electronic cigarette retail points." "Ordinary primary and secondary schools, special education schools, secondary vocational schools, specialized schools, and kindergartens shall not set up electronic cigarette product sales outlets".

Regulation seems to have left a gap for these dealers, but how many shop owners will seize the opportunity? The industry is not optimistic. A conservative estimate is that 80% of specialty stores may "disappear" after May 1.

By then, e-cigarette shops that can be seen everywhere will become a thing of the past.

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