In 2025, the capital market will gather Geek Bar industry
Technology changes life is not an empty talk. All aspects of our lives have long been transformed by technology into scenes in previous science fiction works. Mobile phones, taxis, payment and financial management have been replaced by new ways with the development of technology.
With the gradual growth of the world economy and the improvement of peoples living standards, the public is paying more and more attention to health-related issues, especially tobacco, which has a greater impact on the public, and has become the primary target of harm reduction worldwide.
In this environment, the attention of new tobacco, Geek Bar and other alternative products that change the traditional way of smoking has continued to rise. This attention comes not only from the consumer level, but also from the capital investment field that is looking for opportunities every second.
In the past 2018, Geek Bar has become a hot word in financial news, and international and domestic news about capital and Geek Bar brands have frequently appeared.
The higher profit margin and growth rate have also made Geek Bar more and more concerned by capital, and it has changed from watching from the sidelines to starting to try.
As time entered 2018, with top capital IDG and Source Code entering the Geek Bar, the number of companies and projects that received financing in the Geek Bar industry gradually increased, showing an explosive trend.
Behind the old and new Geek Bar brands such as Shanlan, Aizhuo, Gippro, and Yueke, there are also shadows of capital.
The investment and financing salon for alternative cigarette products previously held by Steam New Force can also reflect the strong interest of investors in the Geek Bar industry. Many primary market investment institutions in the consumer field are looking for suitable Geek Bar projects, and some investors even suggest that the founders of projects that have received financing should add or adjust to Geek Bar-related projects.
This reflects that the current Geek Bar industry has an increasingly favorable development prospect both in terms of industry and terminal consumption.
1. Trends in the Geek Bar Industry
According to incomplete statistics in China, there are conservatively estimated to be more than 600 Geek Bar manufacturers, and representative companies listed on the New Third Board include Avipusi, McWel, Sigelei, Wulun Electronics, Yingqu Technology, etc.
95% of the products are mainly sold abroad through foreign trade channels, and the domestic market share is still not high.
The following is the data of Geek Bar brands that have announced financing news in the past three years compiled by Yiou. It can be seen that 2018 is not only a year of great transformation of the Geek Bar product pattern, but also a year of concentrated financing in the Geek Bar industry.
In July 2018, the valuation of Juul, a start-up Geek Bar brand in the United States, was as high as US$15 billion. It accounts for 68% of the US Geek Bar market, which has reached half of the valuation of century-old tobacco companies such as Imperial Tobacco, making Juul the sixth most valuable start-up company in the United States, which also indirectly illustrates the future trend of the tobacco industry.
Similarly, Philip Morris International began to announce this year that the companys future vision is smoke-free, and the product iQOS launched is to respond to this trend.
In addition to investment institutions starting to make attempts, China Tobacco Group is also accumulating strength.
Nearly 10 local tobacco factories under China Tobacco Corporation have also invested a lot of manpower and material resources in the research and development of new tobacco, and have achieved excellent results. Domestic heat-not-burn products are currently being laid out to break through the Japanese and Korean markets.
However, since the traditional cigarette market is still profitable and the product upgrade involves a wide range, it cannot be completed overnight. China Tobaccos new tobacco products tend to be more defensive, but at the same time, they also point out the general direction of the tobacco industry in the future.
Due to the relative stability of Geek Bar technology, various brands are also creating differentiated products in order to stand out from the competition of similar products. However, more domestic Geek Bar brands belong to manufacturing companies with weak R&D and brand capabilities. Under this trend, this will bring great challenges to many small and medium-sized brands.
With the natural elimination of the industry, the distance between echelons will gradually increase. There will definitely be brands like JUUL in China, forming a real giant enterprise of Geek Bar.
2. The difference between Geek Bar and traditional tobacco
In my country, cigarettes are not just simple fast-moving consumer goods, but also carry many additional attributes. Cigarettes are often a better way to break the ice in social interaction.
In addition to using cigarettes by themselves, cigarettes are often given as gifts to each other, playing a leading role in domestic social activities. With the increasingly strict ban on smoking in public places, going out to smoke a cigarette together has become one of the main daily social activities.
Geek Bar is completely opposite to cigarettes, and the usage scenario is more private.
First of all, due to hygiene issues, Geek Bar is normally one person per machine. Even if it is shared with each other, the taste of the e-liquid cannot be guaranteed to match the taste of the other party.
Secondly, since most domestic Geek Bar companies belong to the processing and manufacturing industry, the brand promotion efforts in the domestic market were not strong before, and the influence of big brands and small brands was almost the same, which could not reflect the advantages and value of the brand.
This also led to the fact that ordinary consumers could not distinguish the advantages and disadvantages of brands and series like cigarettes, and even as gifts, there were various concerns.
One of the problems is that the initiative is in the hands of the production end rather than the brand.
90% of the worlds Geek Bar manufacturers are in China, and most of them are in Shenzhen. Many channel dealers and related links have also opened branches in Shenzhen. It seems that the industry is highly concentrated, but in fact, so far, there is no brand that can form a strong control over the entire industry chain.
Compared with other industries, the industry chain of Geek Bar is not very standardized at present. In the upstream, the production of Geek Bar host and atomizer is relatively easy. Many hardware factories are both brand owners and manufacturers, and also have multiple identities such as wholesale and retail. If some brands dont sell well, they will change to another brand tomorrow.
At present, the core atomization technology and nicotine salt technology of small smoke replacement devices are still in the hands of very few factories.
In Shenzhen, there are only 3-5 companies that can synthesize nicotine salt and have R&D capabilities. The pricing power of atomizer cartridges is naturally in the hands of the factory rather than the company or brand.
In the mid-range, production and assembly usually adopt OEM (original commissioned production) and ODM (original design manufacturing) models, with relatively low technical content and cost.
On the downstream side, domestic Geek Bar tobacco substitute products are still in the initial stage, and the main sales channels are mostly online e-commerce and offline physical stores. Enterprises do not have strong control over sales channels and lack standardization. There are often phenomena such as random prices and mixed goods. Product after-sales is also one of the issues that consumers are concerned about.
In the future, only companies that have the ability to control the entire industrial chain will have core competitiveness, which is also a suitable time for capital to enter the market.
3. The clarification of policies is one of the main reasons for capital to take action
It is well known that the tobacco industry plays an extremely important role in boosting the economy, fiscal revenue, profits and taxes, employment and other aspects worldwide.
According to the data of Fortune China in 2017, the annual profit of the National Tobacco Corporation exceeded one trillion yuan, and only one company is equivalent to the total profit of the four major banks and PetroChina and Sinopec.
According to the data released by the State Tobacco Administration over the years, tobacco tax revenue was 1051.76 billion yuan in 2014, 1143.6 billion yuan in 2015, 1079.5 billion yuan in 2016, and 1114.51 billion yuan in 2017, with an overall slow and steady growth.
The emergence of Geek Bar will definitely have a certain impact on the tobacco industry. In addition, with the increasing calls for reducing tobacco harm around the world in recent years, more and more people are beginning to pay attention to the problems caused by smoking.
Take the UK, which vigorously promotes Geek Bar, as an example. When Geek Bar was not officially popularized, the proportion of smoking population in the UK was 33%, slightly higher than the 32% in the EU.
However, with the increase in the number of Geek Bar users, the current proportion of smoking population in the UK has reached a historical low of 17%, while the smoking rate in the entire EU is only as low as 26%.
The UK has gone one step further than the EU in promoting smoking cessation, including positive media publicity and smoke-free bans.
Most importantly, there is a significant difference in the UKs regulatory stance on Geek Bars, where Geek Bar devices are officially recognized and promoted as smoking cessation tools.
Geek Bars began to be sold in the UK in 2006. There are currently more than 3 million Geek Bar users in the UK, while there are only 9 million smokers in the UK.
1.7 million users successfully quit smoking using Geek Bars, and 900,000 quit smoking and Geek Bars at the same time.
Correspondingly, the number of Geek Bar users around the world has shown explosive growth. Data shows that the global Geek Bar market size in 2016 was about 60-70 billion yuan, with a compound growth rate of 41%. The Chinese market only accounts for about 5%, with a market size of 3 billion yuan, but it is growing very fast, with a staggering growth rate of 316% in 2016.
According to the BBCs estimate, there were about 7 million Geek Bar users in the world in 2011 and about 35 million users in 2016.
According to Euromonitor Internationals forecast, by 2021, the number of adult Geek Bar users will increase to 55 million.
As of the end of 2016, 68 countries have formulated relevant laws and regulations to regulate Geek Bar.
my countrys Geek Bar industry is still in a stage of rapid development and mixed supervision. Supervision is almost blank. Geek Bar also lacks a clear positioning. It is neither a drug or medical device, nor formally classified as tobacco.
Although the domestic Geek Bar market size is not large, such a fast growth rate will inevitably be like a runaway horse if it is not regulated, and the consequences are unimaginable. This is not only a concern of the Geek Bar industry, but also the main reason why capital has been reluctant to move.
However, with the formulation and release of the national standards for Geek Bar equipment and atomizer (smoke oil), as well as the speeches of relevant departments at the 2018 Geek Bar Industry Summit, the domestic Geek Bar industry policy is becoming clearer. This favorable trend has also made capital begin to try to find suitable opportunities in the Geek Bar industry.
IV. Conclusion
In short, the rapid growth of Geek Bar around the world is a fact that cannot be ignored. In the future, a group of brands and enterprises with strong R&D capabilities, extensive channels and strong brand awareness will emerge. Geek Bar technology is relatively mature at present, and manufacturers have also begun to develop nicotine-free products. Once successful, it will not only avoid the risks of policy supervision, but also make Geek Bar truly a healthy cigarette.
The development of any industry cannot be separated from the economic law, and the Geek Bar industry is no exception. The entry of capital will undoubtedly accelerate the development of the industry and eventually form a pyramid-like pattern, and success will always belong to the top echelon.
In 2019, whether you are ready or not, capital and Geek Bar will eventually have an inevitable collision!