E-cigarette market overview
Sep 14, 2022
Definition and classification of e-cigarettes and cigarettes.
E-cigarette products or vape products in their general definition include atomized e-cigarettes and HNB (heated non-combustible cigarettes). HNB includes both solid e-cigarettes and heated cigarettes, which differ in composition. The definition of e-cigarettes in China includes only atomized e-cigarettes and solid e-cigarettes, while tobacco products such as heated cigarettes made directly from tobacco fall under the administration of cigarettes and are not included in e-cigarettes.
The data shows that the global retail volume of e-cigarettes continues to grow, with the global retail volume of e-cigarettes reaching $45.3 billion in 2020, and the global retail volume of e-cigarettes is expected to reach $86.7 billion in 2023. The global retail size of atomized e-cigarette industry grew at a CAGR of 18.6% from 2018 to 2021 and is expected to reach US$42.44 billion in 2022. The global retail size of the HNB industry grew at a CAGR of 58.4% from 2018 to 2021 and is expected to reach USD 31.37 billion in 2022.
As the factory of the world, China supplies over 90% of the global production of e-cigarettes. So, what does the Chinese market for e-cigarettes look like?
Data shows that the domestic market of China's e-cigarette industry continues to grow, with an estimated growth rate of 76.0% in 2022 and a market size of US$25.52 billion. The export market of China's e-cigarette industry is expected to grow by 63.4% in 2022, reaching a market size of US$165.88 billion. In 2021, the Chinese e-cigarette industry will employ 1.5 million people directly and 4 million people indirectly, totaling about 5.5 million people.
Foreign authorities have been positively evaluating e-cigarettes for several years, and at this stage it is generally believed that e-cigarettes are far less harmful than traditional tobacco and can be used as a smoking control and cessation strategy. Analysts at Ai Media Consulting believe that with the popularization of national health concepts and the promotion of the e-cigarette market, e-cigarette harm reduction is becoming better understood and appreciated by smokers, and smoking cessation and harm reduction are becoming a mainstream voice.
Research data show that over 90% of traditional Chinese tobacco users have toyed with the idea of quitting smoking, 77.9% have tried, and only 23.8% have successfully quit. The most important reason consumers want to quit smoking is concern about endangering the health of their family and friends (77.1%), followed by fear of harming their own health (74.1%). Almost all traditional Chinese tobacco users have thought or acted to quit smoking, but only about 20% have succeeded.
Chinese consumers of traditional tobacco have a strong desire to quit smoking
The research data show that the majority of Chinese e-cigarette consumers recognize the positive effects of e-cigarettes, but there are still wide differences in the dangers of e-cigarettes, with nearly half of consumers believing that the dangers are the same or higher than cigarettes, which is related to the unregulated development of the domestic e-cigarette industry and the uneven qualification of enterprises in all aspects of production and operation, which cannot protect smokers' experience and health. With the release of national standards and the gradual tightening of regulations, the standards and perception of e-cigarette products will be unified.
The research data also show that Chinese consumers have a greater preference for rich fruits, foods and other flavors of e-cigarettes. The most popular flavors for e-cigarettes among Chinese consumers are fruit flavors. However, if the Chinese government introduces strict restrictions on flavored cigarettes, it could lose more than half of e-cigarette consumers.
Chinese consumers of atomized e-cigarettes have a better experience
More than 60% of Chinese consumers are satisfied or very satisfied with the product's price, appearance, taste, operation, and purchase channels. 42.7% of consumers say they will increase their spending on e-cigarettes, but according to experts, price is the lowest consumer rating for atomized e-cigarettes because atomized e-cigarettes are in their infancy in China and competition between companies is not yet very strong. If the number of consumers and distributors increases in the future, the price can be further reduced.
Since 2021, the State Council has issued and improved national standards and administrative methods related to e-cigarettes, clarifying that e-cigarettes fall under the administration of the Tobacco Monopoly Bureau and qualifying e-cigarettes as new tobacco products, resulting in greater standardization of the production and operation of the e-cigarette industry. According to AIMC analysts, the new regulations mean that e-cigarettes will be formally given legal status as new tobacco products at the national level, and the implementation of the license will strengthen the supervision of e-cigarette market participants from the source in terms of production, wholesale, and retail qualifications, which will greatly improve the chaotic and disorderly operation in the country.
Foreign health organizations have been evaluating e-cigarettes for several years and at this time generally believe that e-cigarettes are far less harmful than traditional tobacco. Research data shows that over 90% of traditional tobacco users in China want to quit smoking, and they are most interested in the supportive effect of e-cigarettes in smoking cessation. Smokers have a strong desire to quit smoking, and consumers see e-cigarettes as a way to quit smoking, and the widespread use of e-cigarettes among smokers is expected to relieve the burden on medical institutions and have positive social effects.
Major countries and regions around the world-Europe, the United States, Japan, and South Korea-have issued clear policy guidelines and regulatory measures for e-cigarettes. Since 2021, the State Council has issued and improved national standards and administrative methods for e-cigarettes, clarifying that e-cigarettes fall under the administration of the Tobacco Monopoly Bureau and classifying e-cigarettes as new tobacco products, leading to the refinement of the production and operation of the e-cigarette industry.
In short, the vape industry has seen a huge surge in popularity in recent years, and it doesn’t look like it’s going to slow down any time soon. How to promote the standardization of the entire process of the e-cigarette market from production to trading, while continuing to attract traditional cigarette consumers to convert to e-cigarettes, to achieve the purpose of quitting smoking and harm reduction, to achieve the global health goals, is the direction we still need to think about and work for hard.