What is the market space for synthetic nicotine in the future?
In recent 1-2 years, Synthetic Nicotine accounted for only 1-2% of the world’s total. So, it has been seven years since NGL has the world’s leading technology, and the synthesis method has not yet replaced the extraction method on a large scale. What is the reason? I think the reasons may include: 1. The selling price is relatively expensive (the core reason). It seems that the selling price is not posted on the NGL official website, and a separate inquiry is required; 2. Consumers have low awareness of Synthetic Nicotine. They take it for granted that “natural products” are “better” than “artificial products” (in fact, such “taking it for granted” is wrong and can be corrected through education in the future); 3. Although NGL technology is far ahead (Europe has caught up), the production capacity (existing scale, expansion efficiency) and manufacturing cost do not have “subversive power”; 4. Due to the comprehensive impact of 1-3, international tobacco giants do not have the power to use Synthetic Nicotine in large quantities, because Synthetic Nicotine means expensive and insufficient supply.
So what we see now is that people who closely follow the trend of international tobacco giants will tell you which giants have not heard of using Synthetic Nicotine, and only small and medium-sized flavor tobacco manufacturers who can not pass PMTA will use Synthetic Nicotine, because they are “bad children” who intend to bypass FDA supervision, and they look arrogant when they are playing a side ball with supervision, Some products are shoddy, which in fact lowers the grade and image of Synthetic Nicotine, thus continuing to drag down the promotion of Synthetic Nicotine to large manufacturers and forming a vicious circle. For NGL, as long as they can meet this part of demand, they can achieve double growth, and selling to large factories is bound to reduce the gross profit. Therefore, it seems that they are not so urgent to penetrate into large factories. Whether Synthetic Nicotine products are really good or bad and its long-term prospects should be judged by old smokers seeking harm reduction products, rather than a 16-year-old high school student. I don’t know whether you agree with this view. If you have never really reached a sufficient number of mature end consumers, how can you get a convincing evaluation?
A Chinese company is about to become the leader of this batch of cutting-edge Synthetic Nicotine with legal and compliant, low-cost Synthetic Nicotine technology and mass production capacity. As mentioned earlier, the core obstacle to the promotion of synthetic method is the price factor, so the sales ratio and respective selling prices of the products sold by this Chinese company at home and abroad are of great significance. The reason why it is significant may be related to whether China’s e-cigarette industry chain will have a richer upstream and downstream layout, more efficient value creation and more obvious strategic significance. In a word, with a stronger upstream industry chain, it will be more competitive than without it.
The future is still full of uncertainty. In the medium and long term, the replacement rate of Synthetic Nicotine may reach 10%, 20%, or even higher, or only 3%, 5%, which may take 5, 8 years, 10, 20 years, or even longer. This is why two years ago, 200 tons would be a more reasonable figure, rather than 500 tons or 1000 tons immediately. First, achieve the purity requirements of e-cigarettes stably and at low cost, step by step, step by step. These must be scientifically planned from the perspective of business and strictly implemented with specific measures in line with safety and environmental protection.
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