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April data of us electronic cigarette: Juul share 64%, VUSE share 16%

2020/06/15|Industry news

On July 12, 2019, the Maryland court requested the FDA to advance the deadline of PMTA application from August 2022 to may 2020; however, due to the outbreak of the new crown epidemic in the United States, the FDA has obtained permission from the Maryland court to extend the deadline of PMTA to September 9, 2020, i.e. the relevant brands and manufacturers that submitted the PMTA application before September 9 of this year, which can continue to be in the next year It is normally sold on the market (unless FDA presents its opinion on the negative impact of the product within one year). In addition, on January 2, 2020, the FDA officially issued a ban on flavored e-cigarettes to curb the use of e-cigarettes by teenagers, which led to nicotine addiction. The ban is mainly aimed at unauthorized and attractive flavored (except tobacco and menthol) e-cigarettes for children, while open-ended large cigarettes and one-time small cigarettes are temporarily out of the scope of the ban and can still be sold normally. We believe that from the perspective of national health, FDA still supports new tobacco products such as e-cigarettes, provided that the product is legal and compliant, and strictly controls the purchase and consumption of young people.

Sales update: the same proportion of sales slightly declined, with the market share of Juul reaching 60%

According to the latest Nielsen channel statistics of e-cigarettes in the United States, the sales of e-cigarettes may be slightly affected by the epidemic and regulatory impact, and Juul is still the largest brand. According to Nielsen's statistics on its channels, the total sales volume of mainstream e-cigarette products in the United States (determined by the total dollar amount) fell by 12.8% year-on-year in the four weeks ended May 2, but the accumulated sales volume of the whole year still maintained a growth of 16.3% year-on-year. According to the monthly data, Juul has 64.3% market share, British American Tobacco's electronic cigarette VUSE has 15.8% market share, ranking second, followed by njoy (11.6%) and Imperial Tobacco's electronic cigarette Blu ecigs (4%). Overall, the downstream brands in the United States have become highly centralized, with CR3 over 90%. (Note: Nielsen's statistical forecast of sales of major retail stores does not represent the actual total sales)

Recent suggestions on new tobacco are as follows:

International Supply Chain: SIMORE (the world's largest atomizing equipment manufacturer); Yiwei lithium energy (holding SIMORE); Yingqu Technology (iqos precision parts secondary supplier). China's supply chain: Jin Jia shares (together with Yunnan tobacco, Xiaomi ecological chain chain new tobacco main channel), Ji you share (layout of new tobacco research and industrialization), Dongfeng shares (shares of new tobacco products), Shun Hao shares (smoke bombs and cigarette sets layout), Warburg International (tobacco flavor and new tobacco raw materials layout leading), China flavor and fragrance ( Acquisition of international electronic cigarette manufacturer giri).

Risk hint: new tobacco policy change risk, sales less than expected, listing progress less than expected; enterprise development less than expected, technology development risk.

1. How about the supervision and sales of atomized electronic cigarettes in the United States?

1.1. Regulatory update: PMTA deadline extended to 9 September

The PMTA deadline is extended to 9 September 2020. Since the U.S. FDA officially put e-cigarettes into the regulation in 2016, the change of the regulatory policy of the U.S. FDA has become one of the major trends in the industry. In the past two years, the rapid increase of the proportion of young people using e-cigarettes in the U.S. has also caused the FDA to pay attention to and speed up the supervision of landing e-cigarettes. On July 12, 2019, the Maryland court requested the FDA to advance the deadline of PMTA application from August 2022 to may 2020; however, due to the outbreak of the new crown epidemic in the United States, the FDA has obtained permission from the Maryland court to extend the deadline of PMTA to September 9, 2020, i.e. the relevant brands and manufacturers that submitted the PMTA application before September 9 of this year, which can continue to be in the next year It is normally sold on the market (unless FDA presents its opinion on the negative impact of the product within one year).

On September 25, 2019, the U.S. FDA released "premarket tobacco product applications and recordkeeping" Proposed act of requirements, under which an applicant for PMTA is a tobacco product manufacturer, including any manufacturer that produces (mass production), manufactures (small volume customization), assembles, processes, labels, or imports finished tobacco products for sale or distribution in the United States People, including those who repackage or label; products include: cigarettes (including heated non combustible tobacco), self-made cigarette products and their components, smokeless tobacco products (including snuff and chewing tobacco), electronic nicotine delivery system ends (including open and closed electronic cigarettes, cigarette oil, etc.), cigars, pipe tobacco products, hookah tobacco products, etc.

In terms of the category of atomized electronic cigarettes, FDA has set up relatively complete regulatory instructions for the category of ends (electronic nicotine intake device), such as requiring relevant manufacturers to submit instructions on product structure and material, production procedures, product health risk inspection, post marketing plan submission, and how to reduce the induced factors of products to minors. In general, after the risk-benefit balance, if the product has a positive promotion effect from the perspective of National Health (smokers and non smokers), FDA will apply for the product through PMTA listing. At the same time, according to the provisions of section 906 of FD & C act, FDA needs to give electronic cigarette manufacturers reasonable preparation time to comply with the relevant production supervision regulations. FDA said that before the implementation of supervision, relevant tobacco manufacturers will have sufficient time to prepare and prove that their products meet the relevant audit requirements. We believe that from the perspective of national health, FDA still supports new tobacco products such as e-cigarettes, provided that the product is legal and compliant, and strictly controls the purchase and consumption of young people.

Seasoning electronic cigarette is still banned. On January 2, 2020, the FDA officially issued a ban on flavored e-cigarettes to curb the phenomenon of nicotine addiction caused by the use of e-cigarettes by teenagers. The regulatory measures are mainly aimed at closed change type cigarettes: the ban is mainly aimed at unauthorized and attractive flavoring (except for tobacco and menthol) closed type cigarettes and tobacco bombs for children. The relevant manufacturers, distributors and retail stores of the above products need to remove the corresponding products within 30 days, otherwise the FDA will have the right to take compulsory measures (tobacco flavor and menthol flavor Electronic cigarette equipment and replacement cigarette bombs can still be sold normally, such as in gas stations, convenience stores and other channels). For disposable small cigarettes and open electronic cigarettes: the relevant cigarette oil and equipment are not under the supervision of the ban, and can still be sold normally.

1.2 sales update: the same proportion of sales slightly declined, with the market share of Juul reaching 60%

Sales of e-cigarettes picked up on a month on month basis, and Juul is still the largest brand. According to Nielsen's statistics on its channels, the total sales volume of mainstream e-cigarette products in the United States (determined by the total dollar amount) fell by 12.8% year-on-year in the four weeks ended May 2, but the accumulated sales volume of the whole year still maintained a growth of 16.3% year-on-year. According to the monthly data, Juul has 64.3% market share, British American Tobacco's electronic cigarette VUSE has 15.8% market share, ranking second, followed by njoy (11.6%) and Imperial Tobacco's electronic cigarette Blu ecigs (4%). Overall, the downstream brands in the United States have become highly centralized, with CR3 over 90%. (Note: Nielsen's statistical forecast of sales of major retail stores does not represent the actual total sales)

Market share of major e-cigarette brands in the United States

Note: the report in this paper is excerpted from the research report published by Tianfeng Securities Research Institute. See the full report for the specific report content and relevant risk tips.

Securities Research Report: regulation and sales of e-cigarettes in the U.S. due to the imminent listing of SIMORE

External release time: June 14, 2020

Report Issuer: Tianfeng Securities Co., Ltd. (securities investment consulting business qualification approved by CSRC)

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