Industrial Restructuring under New Vape Regulations

With the implementation of new vape regulations, the entire industry is undergoing unprecedented changes. The vape market, which was once dominated by fruity flavors, has now completely stopped production and has shifted to the stage of inventory clearance. Consumers began to stock up, causing temporary chaos in the market.

As the world's largest vape manufacturing country, China provides 90% of products to the global market every year. However, the implementation of the new regulations has had a huge impact on all aspects of the industry chain.

Upstream e-liquid manufacturers are the most affected part. Their monthly e-liquid sales plummeted, and domestic business volume fell by 70%. Although they have accumulated experience in dealing with regulatory contraction, the impact this time still cannot be underestimated.

Fortunately, China's e-liquid factory have strong production resilience and rapid adjustment capabilities. They have adjusted their production lines according to the new regulations in the United States to ensure the stability of supply. This also provides a solid guarantee for the smooth transition of the market after China's new regulations.

At the same time, some pioneer e-liquid manufacturers have developed e-liquids in various flavors that meet FDA requirements, including China Tobacco’s classic flavors of Yuxi and Yellow Crane Tower e-liquids. Their successful experience provides valuable reference for the upgrading of the entire industry chain.

However, the new regulations have a more profound impact on vape brands. Most of the vape brands currently on the market were established around 2017 and rely on traffic to gain customers and financing. But now, the state’s attitude towards clearing up traffic has meant that capital is no longer invested as heavily as in the past, and marketing restrictions have also made it more difficult to acquire customers.

In addition, the "Vape Management Measures" stipulate that companies or individuals on the sales side need to be qualified to engage in vape retail business, making the opening of vape brands offline stores no longer a natural expansion, but a struggle to survive. This undoubtedly brings huge challenges to the long-term strategic goals of vape brands.

However, for small brands, the emergence of new regulations also brings opportunities. The regulations that do not allow the establishment of brand stores give small brands the opportunity to enter collective stores, but they also face greater challenges and risks. Market share may further concentrate towards the top, and small brands may go bankrupt in this round of impact.

Overall, the implementation of new vape regulations has brought huge changes and challenges to the entire industry chain. However, this is also an opportunity to reshuffle and upgrade. Only those companies that can quickly adapt to changes and seize opportunities will be able to gain a foothold in the future market.

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