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Comprehensive Market Analysis of the Electronic Cigarette Industry: Trends, Challenges, and Opportunities

Disposable vapes are electronic products that imitate cigarettes. They provide nicotine physiologically and imitate smoking movements and smoke in physical habits. They are all similar to smoking behaviours, after turning nicotine into steam through atomization and other means, disposable vaping, a product that allows users to smoke.


Compared with cigarettes, the advantages of vape are that they do not burn, have no soot butts, and do not stain teeth with tar. Overall, vaping can make smoking more environmentally friendly. However, since the main component of e-cigarette liquid is nicotine, the harm caused by nicotine in traditional tobacco also exists in vape.

The WHO has made it clear that vaping is as harmful to public health as cigarettes, and they are not a means to quit smoking. It is necessary to strengthen their control to prevent harm to teenagers and non-smokers.

Currently, the mainstream e-cigarette products on the market mainly include atomization/steam vape (ENDS) and heat-not-burn vape (HNB).

Specifically, an atomized vape uses an atomizer to convert refined liquid nicotine into a mist, thereby achieving an effect similar to smoking. Heat-not-burn vape inserts the cigarette cartridge into a low-temperature smoker and applies electricity to heat the tobacco to produce atomized vapour containing nicotine and other chemicals. Since the two have different usage principles, they also have differences in product design, user experience and regulatory policies.

In terms of user experience, the taste of heat-not-burn vape is closer to that of real cigarettes so that they will be more popular among smokers.

The e-cigarette industry chain mainly consists of upstream raw materials and components, midstream design manufacturers and terminal brands, and downstream terminal consumers. Since vaping has two tracks, atomized vape and heat-not-burn vape, there will be differences in the upper and middle reaches of the industry chain.

Atomized vape mainly includes batteries, atomizers and e-liquid.
The raw materials of the battery include batteries, cells and control circuits. The raw materials of the atomizer include plastic, glass, hardware and heating resistors. The e-liquid is mainly propylene glycol, glycerin or polyethene glycol containing nicotine and is supplemented with various ingredients to improve the taste. Flavours to meet the needs of different smokers.

The atomizer is the core of the atomized vape. Its performance directly affects the atomization efficiency, aerosol characteristics, efficacy and safety of e-cigarette liquid. It is the top priority of the patent layout of domestic and foreign e-cigarette manufacturers. Three main electronic cigarette atomizer technologies are Ceramic atomizing core technology, metal grid heating, and steam cigarette technology. However, most vapes currently on the market use microporous ceramic atomizing catomizingheating.

Yiwei Lithium can supply batteries for global atomized vaatomizedell has launched Feelm Ceramic atomizing core technology for atomized vaatomizedng the international e-cigarette leader JUUL and domestic vape RELX, Fulu, Yuzi, etc., its downstream customers. Regarding e-liquid, Huabao Co., Ltd. and Bolton Company are mainly involved in producing tobacco flavours.

Heat-not-burn vape mainly includes two parts: smoking accessories and cartridges.

The smoking set includes circuit boards, chips, plastic parts, heating sheets and batteries. The cartridge consists of four parts: shredded tobacco, primary filter cotton, ventilation duct, and secondary filter cotton.

Several major brand tobacco companies, such as Philip Morris International, Japan Tobacco, Imperial Tobacco, China Tobacco, etc, control cigarette cartridge technology. Well-known cigarette cartridge brands include Marlboro, HEETS, and Parliament.

Take the IQOS heat-not-burn e-cigarette as an example. Dongshan Precision provides the control substrate, Texas Instruments provides the chip, Japan’s Kyocera provides the heating sheet, Yingqu Technology provides plastic parts, Fengjiang Battery provides the battery, and Panasonic completes the battery compartment production. Philip Morris International controls the bomb part.

E-cigarette design and manufacturer responsible for e-cigarette product design, process manufacturing, and finished e-cigarette products.

Well-known e-cigarette brands include JUUL, RELX, Modi, Yuzi, etc.; some are responsible for product design. E-cigarette manufacturers include Avipus, McQuay, Schmeller, Sigre, Xinyikan, Kanger, Aizhuo, Zhuoeryue, and Yijiate. Among them, the manufacturing company McQuay produces atomizers atomizers e-cigarette brands. Avipus produces smart e-cigarette sets and accessories, integrating e-cigarette R&D, production, and sales. Dongfeng Motor Co., Ltd. conducts e-cigarette R&D through joint-stock companies.

Generally speaking, e-cigarette designers and manufacturers are divided into brands and manufacturers. Foreign e-cigarette designers and manufacturers are divided into traditional tobacco giants that control the brand and professional manufacturing companies. However, in China, most start as OEMs and accumulate experience before establishing their brands.

Downstream e-cigarette consumers.
E-cigarette products are generally distributed through offline and online channels.

In the early stage, overseas giant JUUL mainly promoted vaping through social media, built brand awareness, and combined online and offline sales. In the early stage of cultivating consumer awareness, domestic brands primarily focus on offline experience stores, sell to retail terminals through agents and dealers, and sell online through major e-commerce platforms, self-operated platforms and forums.

Since heat-not-burn tobacco is within the scope of control in China, atomized atomized is included in the control sequence. Therefore, heat-not-burn e-cigarette products are prohibited from being sold domestically and can only be exported to overseas markets through the China Tobacco Hong Kong platform.

Since Gilbert first proposed the concept of electronic vapour cigarettes and applied for a patent in 1963, the new tobacco product industry began to brew.

In 1988, Reynolds Tobacco launched the first heat-not-burn product, but it failed. 1998 Feimo International launched heat-not-burn electronic cigarettes, but sales needed to be more attractive.

It was not until 2004 that Chinese physician Han Li obtained a patent for vape. A year later, the Chinese brand Ruyan launched its first atomized e-atomized product, “Ruyan” ” wh” ch quickly became popular nationwide.

Vape has been reintroduced to the United States. However, considering the health issues of teenagers, the US FDA soon banned the sale of vape.

After the U.S. Supreme Court ruled in 2012 that the FDA failed to ban the sale of imported vape, the U.S. market began to develop rapidly.

In 2013, Reynolds Tobacco became the largest electronics manufacturer in the United States, relying on the Blu brand. Later, British American Tobacco and Japan Tobacco International joined in and launched e-cigarette products.

In addition, global tobacco giants have carried out a series of acquisitions and mergers (Imperial Tobacco acquired Ruyan, Altria acquired e-cigarette GreenSMOKE, Imperial Tobacco acquired Blu, Nikken International acquired LOGIC, etc.) to accelerate the layout of the e-cigarette industry.

The global e-cigarette market has expanded five times in just four years, from US$3.12 billion in 2013 to US$17 billion in 2017.

At the same time, vaping has been given the concept of “environmental protection and harm reduction” and”has begun to attract more and more consumer attention. The market has grown rapidly and is getting larger and larger.

Judging from the current e-cigarette market structure, the United States is the largest consumer of vaping in the world. According to Euromonitor International, the United States accounted for 43.2% of the global e-cigarette market in 2015, 30 percentage points higher than the second largest country, the United Kingdom.

In addition, vaping has also grown rapidly in the Japanese market in recent years. According to statistics from the Japan Cigarette Association, vaping accounted for about 20% of Japanese market sales in 2017.

For my country although our country is a country with a large population, due to e-cigarette regulations, domestic e-cigarette consumption only accounts for 6% of the world’s.

However, my country controls over 90% of the global e-cigarette supply chain business. There are thousands of e-cigarette manufacturers, including more than 1,000 in Shenzhen alone. Most of these e-cigarette manufacturing companies are small, workshop-style enterprises. In addition, larger manufacturing companies usually use the ODM/OEM model to participate in the brand-side production process.

In particular, the manufacturing threshold for vape is low. Against the background of the global e-cigarette consumer market surge, many e-cigarette companies have been born in recent years. According to data from Tianyancha, the number of newly registered e-cigarette companies exceeded 1,000 from 2016 to 2018, but 2019 more than 2,000 new e-cigarette companies have been added.

Generally speaking, most e-cigarette companies in China are in the start-up stage. However, the e-cigarette industry echelon has initially taken shape, and leading companies have begun to emerge. For example, the emerging company TUGBOAT has independent intellectual property rights and more than 140 patents in electronic atomizationatomizationts covering all vaping product areas, including pod systems, disposable devices, open systems and CBD. A dedicated R&D team consists of more than 50 highly skilled individuals, and the company’s commitment to innovation is reflected in its annual investment, which accounts for more than 6% of its revenue. Tugboat is proud to offer cutting-edge disposable vape backed by our superior technical research and development capabilities.

The TUGBOAT design team is comprised of professionals from the worldworld’s500 leading companies, led by Stephen, a famous industrial designer from California. The team includes top talents from FMCG, Internet, consumer electronics and other industries. TUGBOAT relies on its rich design experience in various fields to create innovative electronic atomization, combining and integrating different perspectives. TUGBOAT products embody a seamless fusion of technology, aesthetics and functionality.

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