China’s Vape Industry: Consumption tax has been imposed, Where will the e-cigarette industry go?

From November 1, the government has started to collect consumption taxElectronic cigarette consumption tax is levied on electronic cigarette products, including pods, vape kits, and electronic cigarette products sold in combination with pods and vape kits. The tax rate for the production (import) link is 36%, and the tax rate for the wholesale link is 11%.

The Mandatory National Standard for Electronic Cigarettes was also issued earlier, requiring all fruit-flavored electronic cigarettes to be removed from the shelves. After the implementation of these regulations, what impact and changes will be brought about, the reporter of the temporary newspaper Fusion Media conducted on-the-spot visits and understanding.

New regulations come into effect, and e-cigarette prices rise

On November 9, a reporter from Linbao Fusion Media visited a retail e-cigarette store in Linyi and found that after the implementation of the new regulations, the prices of various e-cigarettes in the store have been raised, including vape sets and cartridges. There has been an increase, especially the price of pods has risen significantly.

The previous retail price of three pods per box was 99 yuan, but now the price has risen to 139 yuan. "Since the consumption tax was levied on November 1, the purchase price of our goods has already begun to rise. The current purchase price has caught up with the previous sales price, and some are higher than the previous sales price." The owner Sun Qinhao told reporters, After the excise tax was levied, the obvious change is the increase in the retail price of electronic cigarettes. The manufacturers of electronic cigarettes raised the ex-factory price, and the retailer's price has to increase. The prices reflected in the market terminals generally rose by 30% to 40%.

According to the difference in material and function of vape sets, the original price range is 100 to 300 yuan, and now the retail price of vape sets has increased by 30 to 40 yuan, and even higher-grade ones have increased by 100 yuan; "The original ordinary set of electronic The price of cigarettes can be bought at around 200 yuan, and now it costs at least 300 yuan. Under this price, it is difficult to attract new customer groups." Sun Qinhao told reporters.

Gross profit decreased, merchants gradually changed their business

On November 11, the reporter went to an electronic cigarette shop on Jinan Road, When entered the shop, he could see several boxes of electronic cigarettes of different brands scattered on the shelves, including Snow Plus, RELX, Yooz, ternovape etc, customers come to buy from time to time. "After the consumption tax was levied, the price of electronic cigarettes increased by more than half. For example, the previous one sold for 60 yuan, and now the purchase price is 60 yuan." Mr. Yang, the store owner, said, "I am the only one that sells electronic cigarettes in the three nearby. Now, I'm not going to sell it after I've cleared the stock."

Before the "Compulsory National Standard for Electronic Cigarettes" was officially implemented, the main contents can be summarized as follows: Individuals, legal persons or other organizations that have not obtained a tobacco monopoly license shall not carry out electronic cigarette related production and operation business, and all fruit-flavored electronic cigarettes will be released. racks, and the national unified e-cigarette transaction management platform only provides national standard tobacco-flavored e-cigarettes and smoking sets with child locks.

Now that e-cigarettes have increased taxes and prices, the store owner is in a dilemma. If you sell at the previous price and the purchase price has risen, the cost of tax increases will fall on the shop owner, and the gross profit is too low, and the shop owner cannot maintain normal operations. If you sell according to the wholesale price increase, the retail price of electronic cigarettes is bound to rise.

The operator Mr. Yang also said that the price of national standard tobacco-flavored electronic cigarettes on sale now has risen sharply. The customer group who likes the tobacco flavor will be older and will consider the cost-effectiveness, which will force some customers to choose paper cigarettes and give up electronic cigarettes. .

After visiting and understanding, most e-cigarette operators are not optimistic about the future development of the e-cigarette industry at this stage. "In the later stage, the electronic cigarette industry may not have the form of specialty stores, and it will be sold in supermarkets," said Mr. Yang, the operator.

Upgrade the threshold for early adopters and guide healthy consumption

With the changes in e-cigarette industry policies, the attitudes of e-cigarette consumers have also changed. "I tried e-cigarettes at that time just because of the good smell of fruit, but now there is only tobacco flavor, so it's not interesting." said Mr. Zhang, a citizen.

Consumer Ms. Li said that e-cigarettes levied consumption tax, raised prices, upgraded thresholds, restricted the consumption of some young people, and prevented more young people from trying early adopters; enterprises aim to make profits, and various types of electronic cigarettes emerge one after another. , which also prompts e-cigarette companies to think about it.

From the implementation of various new regulations to the collection of consumption tax, from the ban on the sale of fruit-flavored pods to the rising price of pods, in the eyes of consumers and operators, the electronic cigarette industry seems to have entered a moment of adjustment, and the period of huge profits in the entire market is slowly leave;

However, the collection of consumption tax on electronic cigarettes has a certain positive effect on the long-term development of the industry. The introduction of consumption tax on electronic cigarettes will elevate electronic cigarettes to the same position as traditional tobacco, and tax them according to Class B cigarettes. This measure meets the overall management requirements of the tobacco market and reflects the fairness and unity of the tax system.