Vape's output plummets and layoffs after Internet embargo
In November of this year, the State Administration of Market Supervision and the State Tobacco Monopoly Administration issued a joint document requesting that various market entities not sell vapes to minors, urging e-commerce platforms to close vape stores in time and to download vape products in time frame. Subsequently, major e-commerce platforms have removed vape products.
In other countries, such as the United States, the attitude towards vape has also long taken a 180-degree turn. On September 12, 2019, the White House announced that due to the increase in the number of junior and senior high school students using vape, the use of flavored vape will be banned-except for products containing tobacco flavor.
So far, vape products have been banned in more than 20 countries, mainly in South America, the Middle East and Southeast Asia. Thailand has the strictest smoking laws, while countries such as Australia, Canada, and Norway have introduced many restrictions.
Leaving aside the reasons for smoking bans, the direct result of the global vape ban is to stifle this once-popular air outlet in regulation. Those practitioners who chose to join the industry this year had originally imagined that they had finally seized an opportunity, but never thought of encountering the coldest winter of entrepreneurship in recent years.
On November 12, Juul, a major US vape company, announced its latest reorganization plan. As part of a plan to cut nearly $ 1 billion in costs next year, Juul has now increased its number of layoffs from 500 to 650, accounting for about 16% of the company's 4051 employees. On October 29 this year, Juul announced that it would lay off 500 people by the end of this year. At the same time, the company's CFO and CMO will soon leave.
The ban has an even greater impact on China's vape industry. China's vape foundry not only produces and sells vape to China, but also orders mostly from exports. However, with the expansion of vape's worldwide embargo, export-oriented vape factories Orders have fallen sharply and life is getting worse.
vape is different from traditional cigarettes, mainly through physical atomization, heating e-liquid, e-liquid atomizing, breathing into the lungs, so that the nicotine in e-liquid achieves the traditional smoking effect.
The basic ingredients of e-liquid are glycerin, propylene glycol, nicotine nicotine, and food flavors. Among them, glycerin is commonly known as glycerin. If you require a larger amount of smoke, you can increase the proportion of glycerol.
Whether it is nicotine solution, glycerol, propylene glycol or flavor, there is no clear regulatory attribution. In addition, even the production of domestic vape equipment is basically in a "three none" state, that is, no product standards, no quality supervision, and no safety assessment.
In addition, the development history of e-liquid is much shorter than that of traditional cigarettes, so whether e-liquid has harmful ingredients when atomized, and whether long-term ingestion of these substances can cause chronic diseases or cancer, there are no detailed medical data and The sample can be supported.
In addition to e-liquid, vape's production line is also uneven. More than 90% of vapes in the world come from domestic Shenzhen and surrounding areas. In Huaqiangbei, a world-renowned electronics distribution center, you can see that counters for vapes have also sprung up.
An vape practitioner told interface journalists that in the past year or two, many new vape production lines were originally made for mobile phones. After the downturn in the mobile phone industry, they turned around to make vape.
Lack of core technology, low starting threshold, chaotic industry situation, and lack of supervision have created the take-off of the vape industry. This is both an opportunity and a risk. It's just that entrepreneurs didn't expect that regulation came so quickly.
Since the promulgation of the ban on November 1, domestic vape industry practitioners have also felt that the winter has come. According to a CCTV visit, workers at an vape factory in Shenzhen said that the factory had a thousand or two thousand people. Now there is no overtime and they have resigned. Now 8 hours a day, I can't get 2200 yuan, so many people leave.
vape orders have fallen sharply, and vape channels have become more difficult to ship. At present, there is a large backlog of product inventory in the entire vape industry. Many vape brands have begun to clear vape inventory at low prices.
The closure of online channels and measures to ban online marketing may affect the sales of related brands for a period of time. Brands will also increase the expansion and deepening of offline channels. The cost of offline channels may further increase. rise.
In addition, Juul, an American vape company that originally planned to enter China, silently closed its office in China. An employee who had planned to join Juul told the interface journalist some time ago that he originally thought that the impact of smoking bans in the United States would not last long. At that time, Juul had already prepared a strategy for investing in the Double 11 Shopping Festival, but he never thought he would finally join difficult.
According to CCTV financial reports, data show that in 2018, the number of domestic vape employees exceeded 2 million, with annual sales exceeding 33.7 billion yuan and total exports close to 30 billion yuan. With the tightening of global vape supervision, vape companies should have more than 50% of the pressure to lay off employees. In addition, the number of companies that have declined orders is more than 70%. This is a great pressure and challenge for the entire vape industry.
Many offline stores simply have vape price reductions and discounts. vape startups are no longer secretive, using all kinds of ways to organize offline events and looking for other sales channels. After all, one year has passed since the financing, and it seems that the future trend is unclear. If we do not increase the share, this market may not have their name.
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