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Will Electric Cigarette Displace Traditional Cigarette in The Future?

Will Electric Cigarette Displace Traditional Cigarette in The Future?

  • 2018/12/27

Will electronic cigarette displace traditional cigarette in the future?Many people pay attention to the segment of electric cigarette recently,electric cigarette and traditional cigarette are substitutes.Have you heard of a book named《The Tipping Point:How Little Things Can Make A Big Difference》,it claimed that 20% is such a tipping point,once the subscription penetration reaches 20%,everything can be accomplished with half the effort,so easy,so we begin to pay attention or invest when the subscription penetration of something new reaches 10%.Hence if you want to assess the value of electric cigarette,you need to judge whether it will evolve into a tendency,and it depends on subscription penetration.it deserves your attention when the subscription penetration exceeds 10%,and you should contemplate investment when it exceeds 15%,for it will be unstoppable after exceeding 20%.So what’s the subscription penetration ratio of electric cigarette?

Since it is an opportunity to observe industrial chain,so we opted to refer to big companies’ attitude toward electric cigarette and their market share in this field,the bigger a company’s market share is,the more importance it attached to the development of it,business in this industry is likely to prosper and growth in the future is guaranteed.

Five biggest groups in the world:China Tobacco,PMI,BAT,JTI and Imperial Tobacco Inc.Among them the market share of PMI,BAT,JTI and Imperial Tobacco is 25%,19%,14%,7% respectively.

In 2017,the sales of heat not burn device rolled out by PMI accounts for12.7% of the turnover,the sales amount of rolling tobacco is 15.24 million cases,decreased by 6.3% than the last year,while the sales amount of heatstick increased rapidly from 148,000 cases to 725,000 cases,narrowed the decrease of sales amount to 2.7%.The sales of rolling tobacco declined by 350 million dollars or 3.3%,while the sales of heat not burn products increased from 730 million dollars to 3,640 million dollars,which led to a 7.7% increase in turnover,net revenue including $2,970 million in 2018 and $1,997 million in 2017 related to the sales of RRPs(Reduced-Risk products which can reduce the harm of chemicals,tobacco industry gave it the name to guide public opinions),the sales of heat not burn product made up 13.4% of the turnover in the third quarter 2018,established it’s position of the first place among the big companies,and it’s still growing,it is the year of highest growth since PMI and Altria Group were demerged.

JTI is trying to keep pace with PMI in terms of heat not burn product,it claimed an investment plan of 100 billion yen in heat not burn product,and set a goal of being number one in domestic heat not burn industry by 2020.The sales amount of JTI RRP in the third quarter 2018 is 25 billion yen,the turnover of JTI in the third quarter 2018 is 1,675.8 billion yen,it implied that the sales amount of heat not burn product accounts for 1.5% of its turnover.

heat not burn products

BAT’s attitude towards rolling tobacco and next generation product can be claimed as impartial,It put forward a slogan of transition to innovative company and invested in researching and developing heat not burn product at an earlier stage.It has invested 2.5 billion dollars from 2012,its product is competitive in markets like Europe,its heat not burn product came into the Japanese market PMI and JTI.Generally,it does not approve of the idea that next generation product will replace rolling tobacco in the future rather take it as one among all of its products which is potential and popular,rolling tobacco is still its cornerstone and future development priority,its heat not burn revenue target is 100 million in 2018.

Distinctive from the other three countries,Imperial Tobacco Inc never concentrate on further expanding market or developing heat not burn product,on the contrary,it started to improve brand concentration degree,the core of which was cutting down the number of brands,cultivating superior brands and reducing operating cost.

We can focus on the vision of heat not burn product in terms of the development strategy of the four companies mentioned above.Especially PMI and JTI who are in the same mind on heat not burn product.Besides the transition of those big companies,we should pay more attention to the other company who hold emerging technology.Here I am glad to introduce Mysmok Electric Technology Co.Ltd from Dongguan,China.

It has been engaging in the research and development of a new type of tobacco product that can deliver a mouthful of nicotine but produce no harmful chemicals,no tar or ash.It dose not burn a cigarette,yet bring you the same feel as ordinary cigarette.By now we have already rolled out two kinds of heat not burn devices——ISMOD I and ISMOD II,which sells well in many countries.For more details,please check on our official website:www.mysmok.com or search for our products on Alibaba: https://mysmokchina.en.alibaba.com and https://mysmok.en.alibaba.com/?spm=a2700.7756200.mamo-user-profile.4.72e671d2mcXtZZ.

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