At the end of 2019, the World Health Organization published a report claiming that for the first time, the number of males using tobacco products globally was projected to decline. The findings underscore a seismic shift that has been taking place across the industry in recent years, following a sustained period of growth throughout much of the 20th century.
Propelled by the transformation of consumer habits and a growing awareness of smoking’s associated health hazards, a new industry has emerged. Vaping and e-cigarettes offer reduced-risk alternatives to ordinary combustible tobacco products, and a range of market players – old and new alike – have seized on the opportunity.
As the industry continues to develop, firms have discovered that atomization, the technology underpinning vaping devices, can also be applied to a wide range of other sectors, likely having profound impacts on the future trajectory of such firms.
According to Nexight, atomization is simply “the controlled fragmentation of a liquid stream into smaller droplets or particles.” Beyond just the vaping industry, the technology is used by more than 21,000 companies in the United States alone.
“Atomization technology can be used not only in vaping, but it can also be used for beauty, healthcare, medication and other fields,” said Frankie Chen, a representative for Shenzhen-based vaping technology leader SMOORE, in comments to Pandaily.
Since its closely watched IPO in Hong Kong last summer, SMOORE has become the world’s most valuable company in the vaping industry, with a current market capitalization of around $38 billion. The firm specializes in the manufacturing and R&D of vaping devices and components, accounting for 18.9% of the global market.
“China has a really innovative market for consumer products, for example, atomization beauty products,” said Chen, adding that SMOORE is currently studying how the technology can be used in this particular sector, which would help it to expand its reach especially among younger generations of Chinese female consumers.
Another area of interest is healthcare. In June, SMOORE extended its partnership with Florida-based biopharmaceutical firm AIM ImmunoTech Inc. as the two sides work together in developing a personal inhalation device that can be used for the treatment of COVID-19 and other respiratory viral diseases.
Frank Han, Senior Vice President of SMOORE and President of FEELM, the company’s tech brand focused on atomization, said in September: “In the near future, more and more people will inhale medicines or vaccines with atomization devices. It could even help the world pull through the pandemic.”
For SMOORE and other vaping companies preparing to enter this field, the key to success lies in integrating inhalation devices and the medicine itself. According to Chen, “for the to-be-launched atomization healthcare products, [SMOORE is] going to develop a combined technology of an inhaler and pharmaceutical drug.”
For companies in the industry, diversifying product lines is probably a good idea. In March, the Chinese government introduced a series of draft laws aimed at bringing the sale of e-cigarettes and vaping devices more in line with traditional tobacco-based combustible products. Following the news, Beijing-based e-cigarette firm RELX Technology saw its shares drop by as much as 47.8%, while SMOORE’s fell by more than 35%.
More recently, Chinese authorities on November 26 amended the country’s tobacco monopoly law to include e-cigarettes, effective immediately. As regulation of the industry becomes increasingly stringent in China and across the world, firms that fail to innovate and expand may be in trouble.
Still, major market players insist the decisions are not driven by the policy environment. “We are doing the diversification not just because of the pressure of regulation,” says Chen, continuing, “We are doing this just for our mission: Atomization Making Life Better.”
Shifting consumer habits, advancements in technology and a narrowing regulatory framework have also compelled long-time tobacco giants to adopt a drastically different posture from the past. British American Tobacco (BAT) – now operating under the slogan, “A Better Tomorrow” – claims that consumers increasingly expect alternative smoking products “to provide stimulation and pleasure, in ways previously associated with cigarettes. [BAT] believe[s] such growth will offset the predicted decline in cigarette consumption.”
While it’s too soon to tell if this bold bet on the future of e-cigarettes will pay off, atomization technology, with its wide range of potential applications, seems likely to stick around.