MARKET OVERVIEW
Global E-Cigarette & Vape Market
Market growth will ACCELERATE at a CAGR of about 28.1%
Incremental Growth
USD 18.13 billion
A prominent trend in recent years is the rising sales of the products through e-commerce platforms and other online channels, which has expanded the geographic coverage of the operations both globally and locally.
High Competition & Low Investments
The e-cigarette market is characterized by few entry barriers, leading to a fragmented market with high competition among players and low investments.
USA has been dominating the e-cigarette market in last few years, due to the establishment of industry giants from the tobacco, pharmaceutical, and other major influential sectors in the region
Online platforms were a major distribution channel in China until the ban of online selling of e-cigarettes in 2019, post which companies with offline presence in the region have captured the market.
Partnerships
Key players are moving towards strategic business agreements such as partnerships, collaborations and acquisitions, resulting in heavy investments in the companies and increased customer base and geographic reach.
Consumer Awareness
The acceptance of e-cigarettes by regulatory and health bodies in Europe as an alternative to traditional smoking is expected to drive the market growth. The growth will be led majorly by United Kingdom, Germany, France and Russia.
COVID19 – BOON OR CURSE
E-cigarette vendors used the global Covid pandemic as a successful marketing strategy to drive the sales of their products by offering free hand sanitizers and masks with the purchase of their vaping products.
A study conducted by the Gaiha University showed that nearly 56.4% of the young American population reported change in their e-cigarette use since the beginning of the COVID-19 pandemic.
- One-third of youth quit vaping, and another one-third reduced their use of e-cigarettes
- The remaining youth either increasing their use or switching to other nicotine or cannabis products.
- The study finding depicts that higher nicotine dependence, e-cigarette use frequency, poor online age verification, and several other factors were associated with sustained use of e-cigarette products.
DRIVERS FOR GROWTH OF E-CIGARETTE MARKET
INCREASING HEALTH AWARENESS
Growing research and studies on e-cigarette and marketing of the devices as a safer alternative to traditional cigarettes, are the key drivers of the market. The absence of tobacco in these devices makes the electronic cigarettes a popular substitute, specially for younger generations with increasing health awareness.
PRODUCT
LINE-EXPANSION
Emerging technologies and better product innovations have further fueled the appeal of e-cigarettes. USB-rechargeable vaporizing cigarettes, higher battery power and refillable cartridges are some of the major advancements in the sector, assisting in better functioning of the devices and thereby the expansion of the market.
COST
EFFECTIVE
Various types of rechargeable e-cigarettes are available in the market, which are not just affordable but also economical in the long-term as compared to conventional cigarettes. Moreover, rising costs of conventional cigarettes is further fueling the growth of such devices.
PROMOTIONAL
ACTIVITIES BY VENDORS
The market is seeing a growing number of vendors and distributors aiming to strengthen their position by marketing their products to the consumer base. Initiatives like organizing vape tricking competitions (such as by Shenzhen WOTOFO Technology in 2019) are anticipated to drive the segment growth over the forecast period.
FLAVORS
The growing variety of flavors for e-liquids, from tobacco to fruits and botanicals, is gaining huge popularity in the market, specially amongst the youth. In addition to the vast selection, various customizations can be supplied to the users too such as combining of different flavors as per user demands.
CUSTOMIZATION
Apart from the diversity in e-liquid flavors, further customization features are also being offered by vendors such as temperature control, varying levels of nicotine concentration, skin color and shapes, variable PG/VG ratios, as well as introduction of smart technologies such as Bluetooth-enablement.
WIDER DISTRIBUTION CHANNELS
Post Covid, online platforms have gained a huge popularity as a distribution channels. Apart from e-commerce marketplace, the increasing availability of other channels including supermarket/ hypermarket chains, personalized vape shops, and tobacconists, have also opened huge opportunities for the vendors to expand their consumer base.
MEDICAL REGULATIONS
Licensing of e-cigarettes as pharmaceuticals or quasi-pharmaceuticals, gives the whole product a stamp of medical approval which helps in bolstering the confidence of users in the brand or product. The approval may also be inscribed on the products as health benefits, further encouraging consumers to purchase the e-cigs.
THREATS TO GROWTH OF E-CIGARETTE MARKET
Stringent Government Regulations
The regulations levied by various local authorities across the globe on the sale, and distribution of vaping products, ultimately leads to lower sales and hindered growth of the market. The regulations also cause harm to the consumer perception of the e-cigarette business, dropping the consumer base and further threatening the growth of the market.
Market Over-saturation
The growing competition in the market, although has a positive impact of diversifying the products, also leads to reduced pricing of the products. The price competition leads to reduced profits by the vendors and further cause cost-cutting by the companies in their R&D sector or marketing strategies.
Negative Reported Incidents
The growing competition in the market, although has a positive impact of diversifying the products, also leads to reduced pricing of the products. The price competition leads to reduced profits by the vendors and further cause cost-cutting by the companies in their R&D sector or marketing strategies.
Unreliable
vendors
The low-cost of entry in the market has attracted a large number of entrepreneurs, with different levels of products. To overcome competition, the quality of the products are compromised which ultimately may lead to customer dissatisfaction and act a major hindrance in the future growth of the market.
APPROACHES TO REGULATIONS – USA
According to US law, all non-combustible tobacco products such as electronic cigarettes and vapes, along with e-hookahs and vaporizers come under electronic nicotine delivery systems (ENDS).
Regulatory Enforcement Actions of 2016
A draft guidance was issued in March 2019 for receiving marketing authorization from FDA of any e-cigarette that was not marketed as of August 8, 2016, to avoid law enforcement. The ENDS products that were already in the market as of the effective date were subjected to premarket review process.
Regulation of ENDS
products
The Food and Drug Administration (FDA) regulates the manufacture, import, packaging, labeling, advertising, promotion, sale, and distribution of ENDS, including components and parts of ENDS but excluding accessories. Every domestic manufacturer and importer with a product not commercially marketed in the US as of February 15, 2007 must submit an application to obtain FDA authorization before marketing a “new tobacco product.
ENDS Products for
Therapeutic Purposes
Manufacturers of ENDS products for therapeutic purposes as a drug, or as other nicotine replacement therapy products also require marketing approval by FDA’s Center for Drug Evaluation and Research (CDER).
OTHER NATIONAL APPROACHES TO REGULATIONS
EUROPE
- Article 20 of the Tobacco Products Directive (2014/40/EU) lays down rules for electronic cigarettes sold as consumer products in the EU, currently under evaluation by the EU Commission. However, medical E-cigarettes are excluded from the TPD, as they are regulated by the Medical Device Directive. [Link]
- The tobacco directive sets a maximum nicotine concentration level, packaging and labelling rules, and requirements to monitor and report developments related to e-cigarettes. [Link]
- The product manufacturers, as well as importers also need to submit product data to the relevant EU member authority, as well as RoHS lab test report for validation of substances used in the device. [Link]
CHINA
- China had a non existent law and administration policies for e-cigarettes until recently. However, in a recent draft amendment to China’s Detailed Rules for the Implementation of the Tobacco Patent Sales Law in 2021, the Ministry of Industry and Information Technology and the State Tobacco Monopoly Administration has planned to expand current tobacco use rules to cover e-cigarettes too.
- Post the passing of the amendment, e-cigarette companies will have to obtain special licenses from the State Tobacco Monopoly Administration for manufacturing, importing and selling their products, as well as pay additional taxes. [Link]
JAPAN
- Non-nicotine e-cigarettes are currently not being regulated in Japan.
- However, nicotine-based e-cigarettes are classified as medicinal products and the approval for sale, advertisement, manufacture, importation and distribution of medicinal products are regulated under the Japanese pharmaceutical affairs law. [Link]
- Also, heat-not-burn products that vaporize tobacco leaves are regulated as tobacco in the region and are currently taxed less than traditional cigarettes. [Link]
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