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Heat Not Burn electronic cigarette quietly rising, listed companies have layout

2021/02/02|Industry news

In addition to e-cigarettes, Heat Not Burn "non smoke" products have quietly emerged.

In Shenzhen Huaqiangbei, billboards selling e-cigarettes can be seen everywhere. Recently, heating non combustion "low temperature herbal" product experience stores have been opened one after another. Next to the entrance of Kangle communication building, a number of new stores selling new tobacco products have been opened.

Rise of low temperature herbal Heat Not Burn

On February 1, a reporter from the securities times came to Huaqiangbei. When I walked into a small shop called "Bencao Yunji", many customers were trying or consulting. The store is only about 15 square meters. On the right shelf are rows of various brands of electronic atomized cigarettes. On the left shelf are various brands of heating and non burning "low temperature herbal" products.

According to the shop assistant, the Heat Not Burn products of "Bencao Yunji" started to sell in January, and the current sales situation is not as good as e-cigarettes. Heat Not Burn products on sale include uwoo's heating and non combustion equipment, and low-temperature herbal brands such as baos, zero, wuweijie, pnt, teagar and Xike. Some of these brand products have no nicotine, some have nicotine, and the products with nicotine sell better. The price of a pack of cigarette bombs is about 30 yuan. In terms of sales, mint and blueberry flavored cigarette bombs are more popular. The shop assistant said that the biggest market for Heat Not Burn products is Japan and South Korea, and the products of "materia medica cluster" have been exported. In the future, it plans to promote heating, non combustion and low-temperature materia medica products in the form of offline experience stores.

On the opposite side of "herbal gathering" is another herbal e-cigarette experience store, which displays its own brand products, including heating non combustion equipment and low-temperature herbal brand cigarette bombs.

"The raw materials of herbal e-cigarettes do not contain tobacco leaves, which is not in the scope of tobacco supervision. They can be sold legally, but now we dare not sell them online.". The store manager told reporters that this is the company's first offline experience store, and the second experience store in coastal city will soon open.

In his opinion, e-cigarettes are "for young people". Heat Not Burn products are more suitable for old smokers. Compared with traditional cigarettes, Heat Not Burn products are healthier. In the future, Heat Not Burn products will partly replace traditional cigarettes and have a good development prospect. Based on this, he resigned from the foreign trade industry last year and joined the Heat Not Burn market.

The heating non combustion smoke bomb was initially developed by Fimo international and other foreign tobacco giants. It is to put the special smoke bomb into the heating device and release the nicotine and smoke in the smoke bomb through low-temperature baking. The low-temperature baking temperature is about 300 degrees, which is far lower than the combustion temperature of traditional cigarettes above 800 degrees. The data showed that the content of carcinogenic substances in the smoke of the cigarette which heated not burned was 80% less than that of the ordinary cigarette, which reduced the intake of mutagens by 70%, and reduced the incidence rate of bronchitis and pneumonia by 46% and 36%, which greatly reduced the harm of tobacco products to human body and became a new trend of tobacco consumption.

But these products encounter legal obstacles when they enter our country. In 2017, the State Tobacco Monopoly Bureau formulated and issued the notice on the identification and inspection of new cigarette products, which included four types of new cigarette products (iqos, glo, ploom and Revo) in the identification and inspection catalogue of cigarettes, because the heating non combustible cigarette cartridge was made of cut tobacco wholly or partly and in the form of wrapped cut tobacco.

In 2017, the National Tobacco Quality Supervision and inspection center carried out identification test on the components of iqos "Yandan" samples submitted by relevant units, and determined that the "Yandan" samples contained tobacco characteristic components, and the fillers were made of tobacco leaves. Therefore, the "cigarette bomb" of iqos belongs to tobacco products and the regulatory object of the tobacco monopoly law.

At present, the low-temperature herbal smoke bombs sold by Chinese enterprises are called "heating non burning non tobacco products" and "non tobacco smoke bombs", which work on the same principle as heating non burning tobacco products. The difference is that the part of low-temperature herbal smoke bombs does not contain tobacco ingredients, and mainly uses natural herbs such as tea, Ginkgo biloba leaves and flowers as raw materials, which circumvents the existing laws to some extent And policies and regulations, for enterprises in the field of heating non combustion to find a way out of compliance.

Listed companies in succession

In the first three quarters of 2020, Fimo International's iqos revenue reached US $4.89 billion, accounting for a quarter of the total revenue. Under the background of a 9.3% decline in total revenue in the same period, Fimo International's iqos continued to grow strongly, and has become the main force supporting the company's performance. In the same period, the report released by Japan Tobacco said that the sales volume of Heat Not Burn cigarettes increased rapidly, and it is estimated that Japan's pest reduction products account for about 25% of the total domestic tobacco market The business accounts for about 10% of the domestic market share of harm reduction products. Compared with electronic atomized cigarettes, Heat Not Burn shows a better sales trend in Asian market. According to the analysis of China Tobacco experts, in the future, the pattern of China's tobacco market will be 80% for traditional tobacco, 19% for Heat Not Burn and 1% for electronic atomized tobacco.

The significant advantage of Heat Not Burn products in reducing the release of harmful components has become an important development direction and research hotspot of global tobacco companies.

In 2013, the new tobacco products leading group of China Tobacco Corporation was established to lead the development of new tobacco products. In 2014, China National Tobacco Corporation launched a major research project on new cigarettes to promote the R & D and innovation of new tobacco products. According to public information, large and medium-sized tobacco companies and their research institutes in Sichuan, Yunnan, Hubei, Guangdong, Heilongjiang, Anhui, Jiangsu, Henan, Shandong, Jiangxi, Chongqing, Shanghai and other provinces in China have developed new tobacco fields and developed Heat Not Burn products through self-development or cooperation, and some of their Heat Not Burn products have been successfully exported to overseas sales.

However, because Heat Not Burn's R & D and production technology requirements are higher than those of traditional tobacco, in terms of domestic market development, China tobacco group made the fastest progress in Sichuan tobacco. On January 28, its official micro event information showed that Heat Not Burn products were about to go on the market.

On the contrary, the distribution of Heat Not Burn products in non China tobacco system is faster. Huaqiangbei's "low temperature herbal" products are mostly from small companies in Shenzhen, Yunnan, Beijing and other places, and many listed companies are also in the distribution.

On January 27, the relevant official micro blog of Jiyou Co., Ltd. released an article entitled "tasting Guangzhou's" Xiangyu "and satisfying the smokers' heart with non smoking" core ". On January 17, the holding company Taihu Jiyou Guangyu Technology Co., Ltd. held a "Xiangyu" heating plant core expert appraisal meeting in Guangzhou. This is a Heat Not Burn product with the characteristics of Chinese style flue-cured tobacco. Because it does not contain tobacco products, it is easy to buy after it goes on the market.

On January 26, Shunhao said on the interactive platform that its holding subsidiary Shanghai Lvxin Electronic Technology Co., Ltd. is the main implementation body and platform for the company to invest in new atomizer and new tobacco products and other related businesses. Among them, Shanghai Lvxin shares 40% of the equity of the United States, and Yunnan Xike is a company invested by Shanghai Lvxin in cash and holds 49% of the equity. At present, cigoo, a brand produced by Xike, has a good market share and repurchase rate of low-temperature heating non burning herbal non smoke products.

In May 2020, when answering the investment question, Shunhao said that Shenzhen Jiapin Jianyi Technology Co., Ltd., a subsidiary of the company, successfully developed the first automatic heating non combustible cigarette set of freem, and developed the first generation of herbal granule low temperature heating non combustible products, and successfully automated production. The products have been produced and sold normally.

From the actions of China tobacco system, listed companies and non listed private enterprises, the first year of Heat Not Burn is beginning.

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