Smoking is harmful to health, why does the electronic cigarette market continue to grow?

According to the comprehensive data of Oriental Tobacco News and Heng Bingquan's "2022 World Tobacco Development Report", the growth rate of global e-cigarette sales has rebounded, with a year-on-year increase of 20.0% to 23.65 billion US dollars in 2022. By category, open e-cigarettes and liquid tobacco have increased by 8.1% to 8.72 billion US dollars year-on-year, closed e-cigarettes have increased by 28.2% to 14.93 billion US dollars year-on-year, including one-time e-cigarette sales of 2.55 billion US dollars, a nearly double year-on-year growth. From a market perspective, the United States ($9.00 billion), the United Kingdom ($5.03 billion), and Canada ($1.98 billion) are the top three global markets.
According to customs data, the export of e-cigarettes increased rapidly from January to June this year, but decreased slightly in June. In 2022, the total export value of e-cigarettes and similar personal electronic atomization devices, as well as other non combustible smoking products containing nicotine, was 9.886 billion US dollars. From January to June of 2023, the export value was 5.482 billion US dollars, a year-on-year increase of 29.16%. Among them, the export value in June was 942 million US dollars, a year-on-year increase of 10.38%, and a month on month decrease of 6.66%.
Currently, China's e-cigarette market has formed an extremely complete e-cigarette industry chain with Guangdong as the core. In recent years, with the gradual rise of e-cigarettes globally, the export volume of China's e-cigarette industry has rapidly increased, and the trade volume has continued to expand.
Global e-cigarette market size: Foreign regions account for the majority of sales
From a production perspective, China produces over 95% of global e-cigarettes, with 90% for export and about 5% for domestic sales. The domestic consumer market is still relatively small.
Market size approaching 20 billion yuan
With the continuous progress of product technology and the expansion of the audience of e-cigarettes, e-cigarette products are also emerging one after another, keeping the market size of China's e-cigarette industry growing at a high speed. According to data, the retail sales of e-cigarettes in China in 2021 were approximately 19.7 billion yuan, a year-on-year increase of 36%.
Figure 2: Scale of China's e-cigarette market from 2020 to 2021 (unit: 100 million yuan)
China is a major exporter of e-cigarettes
Compared to the global market size of 80 billion US dollars, China's electronic cigarette consumption market is still relatively small. The vast overseas consumer market for e-cigarettes has driven the production and export of domestic e-cigarettes. About 90% of China's e-cigarettes are used for export. Data shows that in 2021, China's e-cigarette industry exports were approximately 138.3 billion yuan, a year-on-year increase of 180%. It is expected that the export scale will continue to grow, and the export value will reach 340.2 billion yuan by 2024.
Figure 3: Export Scale of Chinese e-cigarettes from 2020 to 2024 (Unit: 100 million yuan)
China Securities News stated that the prospects for China's e-cigarette export industry are broad, and it is expected to continue to maintain rapid growth in the coming years. This is because the global market demand for e-cigarettes is still high, and China, as a major producer of e-cigarettes, has first-class manufacturing capabilities and cost advantages.
China Galaxy Securities also believes that the competitiveness of Chinese e-cigarette enterprises in the international market is gradually increasing, and the export scale and market share are expected to continue to expand.
CITIC Securities stated that the Chinese e-cigarette export industry has benefited from the growth of the global e-cigarette market. Chinese e-cigarette enterprises have competitive advantages in technology research and development, production capacity, and cost control, and are expected to occupy a place in the global market.