---
title: "VPO Seizes the Chinese Market, Applying FMCG Logic to the E-Cigarette Industry"
description: "A test product of a disposable e-cigarette sold one million units in 150 days, showing Hao Xiaomeng the huge potential of disposable e-cigarettes in China. The product that set this record is a disposable e-cigarette called VPO."
author: "李青林"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2019-08-15"
language: "en"
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# VPO Seizes the Chinese Market, Applying FMCG Logic to the E-Cigarette Industry

> A test product of a disposable e-cigarette sold one million units in 150 days, showing Hao Xiaomeng the huge potential of disposable e-cigarettes in China. The product that set this record is a disposable e-cigarette called VPO.

Click to read the original article for details.
A test product of a disposable e-cigarette sold one million units in 150 days, showing Hao Xiaomeng the huge potential of disposable e-cigarettes in China. The product that set this record is a disposable e-cigarette called VPO.

**IQOS's popularity revealed a business opportunity**
As one of the founding management team members of Ruijinlin, China's largest retail channel service provider, Hao Xiaomeng has rich e-commerce operation experience and a keen market sense.
In 2016, an e-cigarette called IQOS, which entered the Chinese market from Japan, caught his attention. The popularity of IQOS made him see the opportunity for e-cigarettes in the Chinese market. At that time, the e-cigarette market in China was just opening up.
The entry of IQOS also made the post-80s generation in China start to pay attention to e-cigarettes, but what they didn't know was that China had already become the upstream factory for more than 95% of the world's e-cigarettes. In Shenzhen, China, a huge e-cigarette industry chain has formed, from production, manufacturing, processing to the blending of flavors and fragrances and nicotine, and they are exported to all over the world through Shenzhen.
IQOS from Japan is a heat-not-burn type, which evaporates the nicotine from the tobacco leaves through a heating rod. Compared with traditional cigarettes, heat-not-burn e-cigarettes are less harmful to the human body, but because they essentially still need to use tobacco, and in China, tobacco is a strictly regulated category, making heat-not-burn e-cigarettes domestically would inevitably be affected by policies.
So Hao Xiaomeng and his team decided to use alternative flavors and fragrances and nicotine extracts to make e-liquid for vapor e-cigarettes.

**Received tens of millions in financing, why do investors favor it?**
In March 2019, VPO completed a Pre-A round of financing of ten million yuan led by strategic investors. Just one month later, the project received a 30 million yuan A round of financing jointly invested by Handing Assets and Maoxin Capital.
From the release of the test product in January 2019 to April 2019, VPO attracted the favor of multiple investors. In just a few months, the Chinese e-cigarette market has rapidly transformed from a blue ocean to a red ocean. What exactly attracted capital attention to VPO?
Currently, there are two types of e-cigarettes on the market: disposable and pod-based. VPO chose to enter the disposable e-cigarette market because other brands on the market mainly focus on pod-based e-cigarettes, with disposable ones as a supplement. Their sales scenarios are mainly specialty stores and shopping malls, and their prices are mostly above 100 yuan. High costs will affect consumers' first experience. VPO's disposable e-cigarette, priced at 39 yuan each, is easier for consumers to accept compared with pod-based e-cigarettes.
In terms of product appearance, VPO is not the traditional cylindrical shape, but ergonomic, with a metal body and a frosted texture. At the same time, to cater to consumers' needs for different flavors, VPO has also launched a variety of flavors. VPO e-cigarettes can be said to have the highest appearance level in the industry, and bright colors can stimulate consumers' desire to buy.
In terms of packaging, VPO also takes a different approach, using visual packaging so that consumers can directly see the real appearance of the product. In addition, the portable packaging design allows consumers to reuse it. VPO's design integrates the design inspiration of professional designers with the aesthetic of post-80s fashion products.
If appearance and packaging put a gorgeous coat on VPO, then under the gorgeous appearance is the safety that VPO creates for consumers. The core raw materials of the e-liquid come from Procter & Gamble in the United States, and through analysis and comparison tests of more than 1,000 traditional spices, the best taste is created for consumers. VPO uses PP material mouthpieces, which are of the same standard as "baby bottle nipples." In addition, VPO will cooperate with Southern University of Science and Technology to establish a comprehensive laboratory for health IoT, and invite domestic medical experts and doctors in the respiratory field to serve as brand consultants to endorse the brand's safety and quality.
It can be said that VPO is a mid-to-high-end e-cigarette. With its perfect product appearance and safe and reliable technology, it can bring consumers a high-quality experience.
Currently, China has 350 million smokers. Although many e-cigarette brands have emerged in the market in recent years, the penetration rate of e-cigarettes in the Chinese market is less than 2%, indicating huge development space. As mentioned earlier, although more than 95% of the world's e-cigarettes come from China, they have always been mainly for foreign trade and lack the ability for brand operation.
The birth of VPO provides a reference for the operation of Chinese e-cigarette brands.

**Laying out offline, VPO needs such distributors**
At present, VPO has opened self-operated flagship stores on Tmall and JD.com. At the beginning of the establishment of the VPO brand, the team determined to only do the existing market and only sell to smokers over 18 years old. Therefore, although it is a safe e-cigarette, VPO's packaging also has a prominent warning reminder.
Selling 50,000 units in 20 days, VPO not only won consumer recognition but also attracted the attention of many distributors. However, VPO has not expanded blindly. Online, VPO has been controlling the number of stores to avoid cross-regional sales and price cuts. At the same time, facing the huge market, VPO has also begun to lay out the offline market.
As a daily consumer product, e-cigarettes are mostly purchased offline by consumers. Since e-cigarettes are not currently classified as tobacco in China, they will enter more retail scenarios. Supermarkets, convenience stores, KTVs, internet cafes, bars, gas stations, and other channels that can meet consumer needs are suitable for VPO sales. At present, VPO has entered more than 20 convenience store chains such as Meiyitian and Haolinju, covering 30,000 stores.
Of course, the brand's offline layout alone is not enough to cover the entire market. Half a year after the launch of VPO e-cigarettes, developing distributors has become an important goal for VPO's next stage. At present, the VPO team has introduced elites from the FMCG industry to form a sales team. With their understanding of the FMCG industry, they can promote the VPO brand and products in a short time. At the same time, VPO also hopes to attract more high-quality distributors to join. VPO has its own judgment in selecting distributors. Having a certain scale and number of outlets, and having strong product promotion capabilities are the two criteria for VPO to select distributors.
In terms of profit, the profit of e-cigarettes can be between 30% and 50%, far higher than the profit of FMCG products. This is undoubtedly a good choice for distributors who want to do e-cigarettes.
As a brand with growth potential, VPO not only ensures that distributors can obtain considerable profits but will also help distributors develop. It ensures no arbitrary pricing online, provides regional protection for distributors, and certain channel support. More importantly, VPO also trains distributors to help them quickly understand the e-cigarette industry.
In the future, in addition to disposable e-cigarettes, VPO will also launch pod-based e-cigarettes, creating a product series of disposable e-cigarettes, pod-based e-cigarettes, and pods for distributors to ensure long-term profitability for distributors.
In addition, VPO hopes to find e-cigarette specialty store customers, convenience store distributors, FMCG distributors, cross-border distributors, and special channel distributors. If you meet the requirements, you might as well experience the charm of the VPO brand.

**It is gratifying that VPO has just received another 20 million yuan A+ round of financing jointly invested by new strategic investors and Handing Assets. VPO has once again proved itself with strength. It is understood that after this round of financing, VPO will launch a brand 2.0 strategy, consolidate product and supply chain strength, serve Chinese smokers with better and safer products and brands, meet the new requirements of the new national standard, accelerate omni-channel layout, and start a new e-cigarette category channel system.**

**The trend is inevitable, the e-cigarette tuyere has arrived**
With the development of the economy and the general environment of consumption upgrading, consumers have begun to pay attention to health and have increased awareness of the dangers of traditional tobacco. E-cigarettes will usher in new opportunities.
Of course, the e-cigarette industry is also facing some difficulties. How to break through is something every practitioner needs to think about. At the 315 Gala in 2019, the news that e-cigarettes contain formaldehyde was exposed, and the e-cigarette industry fell into trouble. Consumers who had just been cultivated once again questioned the safety of e-cigarette products. At the same time, due to a large number of players entering the market, e-cigarettes are also facing serious homogenization, uneven product quality, imitation and plagiarism, and a series of other problems.
Therefore, the e-cigarette industry needs to formulate industry standards, enhance enterprise product R&D and innovation capabilities, establish brand protection and patent protection mechanisms, and formulate strict quality inspection systems to ensure the quality of e-cigarettes.
In China's trillion-yuan tobacco consumption market, the e-cigarette track has also seen explosive growth. In addition to VPO, there are currently more than a dozen domestic e-cigarette brands that have won capital favor, with total financing amounts reaching hundreds of millions of yuan. In addition, many listed companies have also begun to enter the e-cigarette field. Players from all walks of life have entered the market, and what they see is China's huge market. The favor of capital may be able to promote brand explosion. Putting aside policy factors, compliant brands may have greater opportunities in the future.
From August 20 to 23, 2019, VPO e-cigarettes will appear at the FMCG industry event "Trillion Growth · 2019 China FMCG Conference" hosted by New Distribution. At that time, you can experience VPO e-cigarettes on site, and VPO also brings the most attractive activity policies for distributors.


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