#era #Atomization #break
As one of the hot spots in the capital market, the e-cigarette industry has never lacked attention in recent years.
Since the release of the e-cigarette “online ban” in October 2019, major companies in the industry chain have been looking for a compliant and stable development model.
At the beginning of 2021, Fogcore Technology (RELX RELX) under the US stock code RLX was listed on the market, and its market value exceeded US$45 billion on the first day. As the world’s largest manufacturer of electronic atomization equipment, the market value of Simer, which has been listed on the Hong Kong stock market for more than a year, has more than doubled compared with the initial issuance.
The market’s attitude towards the e-cigarette industry is self-evident, but for a long time, voices about e-cigarettes’ low cost, low technology, and product homogeneity are still emerging.
In fact, it can be seen from the prospectus and IPO Q&A contents of the leading brand RELX that after the brutal growth from 2018 to 2019, leading manufacturers have increasingly begun to focus on planning and investment in the entire e-cigarette industry chain.
In the future, to be able to become a “big factory” brand in the industry, it must have strong strength in capital, products, technology, supply chain and offline marketing channels. Since 2018, brands that have entered a virtuous circle, such as RELX and MOTI, which are still active in the market, have gradually opened a gap with the waist and tail brands, and the industry has also entered the 2.0 era of competition.
The “new battlefield” for top brands
After experiencing the “Thousand Smoke War”, in 2021, China’s atomized cigarette industry has ushered in a relatively stable development stage.
In fact, after years of continuous compliance and large-scale development, e-cigarettes are trying to get rid of negative labels such as “inducing minors” and “offline channel chaos”.
The paper “E-cigarette use among Chinese adults: 2015-2016 and 2018-2019 multiple horizontal survey results” recently released by the Chinese Center for Disease Control and Prevention shows that there were approximately 16.9 million adult e-cigarette users in China in 2018-2019, of which 16.2 million are smokers, and smokers account for about 96.2%.
On the other hand, according to relevant data, the leading brand RELX shipped nearly 200 million cartridges in the first three quarters of 2020, and has nearly 5,000 terminal stores (excluding convenience stores and other small and medium-sized channels). This number will be expanded to 20,000 in 2021.
(Film source: MOTI Magic Flute)
It is worth mentioning that, as the Shenzhen brand MOTI (Leiyan Technology), which has achieved success in overseas markets earlier and entered the domestic market in 2018, it has also recently announced that it will start a rare big in the industry in 2021. Subsidy Program-Invest 1 billion yuan in subsidies to open 10,000 new stores. At the same time, there are additional support policies for blank markets, core business districts, and small and medium-sized shop owners.
According to the CIC (China Insights Consultancy) report, by 2023, the Chinese e-cigarette market is expected to reach 11.3 billion US dollars, with a compound growth rate of 65.9% since 2019.
For FMCG, the current channel system of e-cigarettes in first- and second-tier cities is relatively complete. MOTI’s brand specialty stores have settled in more than 90% of the S-level business districts, and more sinking markets are also being developed. .
36 Krypton believes that although the current Chinese e-cigarette market is hot, it is still in the blue ocean stage. The offline market in most regions does not yet have a mature e-cigarette offline sales system.
Next, fast, compliant and reasonable offline system layout, as well as manufacturers with excellent products, technologies and supply chain capabilities will usher in development opportunities.
In the era of Atomization 2.0, how do manufacturers break the game?
Atomized e-cigarettes are not new. They originated from overseas “big smog” culture and are the earliest popular form of atomized cigarettes.
In 2017, Leiyan Technology shifted its development focus to portable atomized cigarettes, which are commonly referred to as “small cigarettes”, and in the same year, it was recognized by users in multiple overseas markets.
In the following two years, brands or suppliers such as RELX, SMART, MOTI, etc. began to make efforts in the domestic market. However, in this emerging industry with little experience and rules to follow, different manufacturers have gradually shown differences Development path.
First of all, the atomization industry giant Smol insists on the underlying technology research and development, and its FEELM ceramic atomization core is a barrier to competition and a moat for the enterprise. It has developed in-depth with many head manufacturers in the fields of atomization core technology and equipment manufacturing. Cooperation.
On the other hand, RELX, which has strong brand marketing capabilities, has the advantage of being a first mover. It invested a lot of resources to build a good brand image at the beginning of the product launch, and at the same time rapidly expanded its offline channels, and maintained its current market share.
MOTI, a brand that followed closely, chose the product-driven approach and focused more on building a product matrix and core technology R&D and application. The technology accumulation in the atomization industry for more than 10 years has played a significant role at this time. The company has a major role in driving market share growth by launching differentiated products for multiple segments.
In 2020, MOTI Magic Flute iteratively launched 4 new products, two of which are also equipped with the MCU frequency conversion chip and surging mode independently developed by MOTI Magic Flute. The temperature is controlled by curve heating to enhance the operational stability and user experience of the atomization device. .
The leading brands in the 2.0 era of the atomization industry have maintained their own basics, so where is the breaking point for the downstream sales side?
As of the end of 2020, RELX brand stores have reached nearly 10,000, with a monthly growth rate of about 1200; MOTI magic flute brand stores opened around 3,000 in the last quarter of 2020, with a monthly growth rate of nearly 1,000. After the introduction of the new store subsidy policy, this number is likely to increase.
In the predictable mid-2021, the leading brand RELX’s offline store advantage over MOTI will have a chance to be reduced from 3~4 times to less than 2 times. This also means that REL’s store system will be reduced. No longer form an absolute advantage over the brands behind them.
In the long run, mature fast-moving consumer goods have differentiated leading brands. As for the atomized cigarette industry, 2021 will be a crucial year for the development of major brands. Brands with clearer brand planning and stronger core competitiveness have the opportunity to secure their position in the first echelon this year. .
It can be said that Smolar driven by the underlying technology, RELX driven by the brand, and MOTI magic flute driven by the product have all found their own development path in today’s Chinese atomized cigarette market. MOTI, which is later than RELX in the domestic market, will also use its own advantages to further narrow the gap with the former in 2021.
Seeking common ground while reserving differences, what qualities do the next successful brand need?
In addition to creating brand breakthrough opportunities through differentiated development, as the industry continues to mature, manufacturers with serious product homogeneity, uneven quality, and chaotic price systems will gradually be eliminated by the market. So what are the necessary basic capabilities needed for future atomization “big factories”?
First of all, the development of atomized cigarettes is inseparable from the word “compliance”. For users, product quality and safety are the first element of concern when consuming. MOTI Magic Flute launched the “Juvenile Shield Project” on the retail side, which explicitly prohibits sales staff from selling products to minors.
Second, the market has increasingly higher requirements for atomized brands. The “OEM” era has become a thing of the past. Mature brands cannot have obvious shortcomings in marketing, products, store operations, and supply chain. It is difficult for OEM pure sales companies to survive.
Take the giant Apple in the digital industry as an example. A well-received iPhone in the market requires not only top-level industrial design, but also a brand with better control over the parts supply chain system. Under such a premise, the product terminal sales system established by the brand can exert its maximum value.
Finally, the intensification of offline competition has gradually allowed brands with strong capital to show their advantages and make them more favored by the capital market. In addition to RELX, which has been listed on the market, MOTI has previously received investment from well-known institutions such as Zhen Fund and SIG Hainer Asia Ventures, and has sufficient capital reserves to support its product development, supply chain and offline retail channels. healthy growth.
In fact, in the past two years, although hundreds of OEM products have been circulating in the market, with the continuous upgrading of top brands in products and retail, the living space of small and medium-sized manufacturers is constantly being compressed This also makes the brand owners active in the market have changed from thousands to dozens. Brand owners with mature retail system construction and operation will further consolidate their market position.
For MOTI Magic Die, which is in the stage of rapid offline growth, its core teams from consumer and Internet companies such as Alibaba, JD, Didi, Uxin, Fiyta, Skyworth, Lexin, Procter & Gamble, etc., also let capital And the market has great expectations for its next offline expansion.
Today’s atomized cigarette market is far from the market share and user popularity of mobile phone products. According to industry insiders, relevant regulatory authorities will continue to conduct long-term and in-depth research on the atomized cigarette industry and formulate corresponding regulatory provisions. .
If you want to gain a foothold in the next head competition, RELX, MOTI and other manufacturers still need to continue to exert their core advantages, and the future “end game” of the atomization market will only have 3 to 5 Giant companies.
In 2021, the atomization industry will be more orderly and standardized. For manufacturers, better control of the entire industry chain and product capabilities will determine their fate in the consumer market.