In early 2024, a so-called "e-cigarette company" claiming to have annual revenue of $1 billion entered the public eye through its financial reports. Many industry insiders were surprised by this revelation: if this company is indeed a billion-dollar giant, why have we not heard of its brand products until now? Where did this company come from and how did it achieve such massive scale?
2FIRSTS conducted an investigative report on the company.
Two-year Report Card: Focus on Vape, Unfazed by Flavor Ban
Plxsur was founded in February 2022 by a trio of heavyweights, including CEO Nigel Hardy, Chairman David Newns, and Charlie Yates, who heads the company's trading department.
The company's business spans across Europe, Asia, and North America, covering the entire tobacco value chain. In its financial statements, the company states its vision as "advancing industry standards" with a focus on harm reduction in tobacco, helping to save the lives of those impacted by smoking.
According to Plxsur's registered address at 70 Pall Mall, London, England, SW1Y 5ES, the company claims to be the "world's largest independent e-cigarette company group." Plxsur is classified in the UK as 66190, belonging to "Activities auxiliary to financial intermediation not elsewhere classified," which means that from a business classification standpoint, it is not directly related to the e-cigarette industry.
According to the annual report of Plxsur, in 2023, the company has successfully partnered with 12 leading e-cigarette companies worldwide, selling products to approximately 4 million consumers. Based on this, the retail sales value calculated per unit sold is $1.835 billion. The adjusted EBITDA market share, excluding interest, taxes, depreciation, and amortization, is around 10% of the global e-cigarette market ($19.34 billion). The goal is to double this market share to 20% in the next five years.
Although Plxsur claims to have achieved revenue exceeding "1 billion US dollars" in 2023, the company does not actually own the 12 e-cigarette companies that generate sales. Among the 12 "world-leading e-cigarette companies" that Plxsur partners with are Hale Vaping (Ireland), UEG Holland (Netherlands), DampShop (Belgium), Pro Vape (Latvia), Puff Store (Italy), Nobacco (Greece), Ritchy Group (Czech Republic), as well as Vape Empire (Malaysia) and Pacific Smoke (Canada). It is evident that Plxsur maintains a broad expansion strategy that focuses on "Europe-centered, expanding to Asia-Pacific," with a "one company per country" layout.
From the business scope of the member list, it can be seen that Plxsur is more optimistic about the future of vape compared to heated tobacco (HNB). Companies such as Pacific Smoke, which owns Flavour Beast, focus mainly on vape brands. This can also be seen in their financial reports. Just with their partners' three brands - Salt, Allo, and Flavour Beast, retail sales are expected to reach nearly $4 billion in 2023.
It is worth mentioning that Plxsur is optimistic about the future market for seasoning products and does not hold a pessimistic attitude towards seasoning bans.
Plxsur boldly stated in their financial report that by 2024, the number of people in the UK using harm reduction products will surpass the number of smokers, and they predicted that other markets may also follow suit in the coming years. This reflects the company's ambition to position itself as an "industry leader" and establish today's largest and fastest-growing independent e-cigarette company group globally.
Accelerating Compliance: Emphasizing Age Verification Technology and Abandoning Disposables
In order to cultivate an image as an industry leader, the company claims that it will prioritize compliance and responsibility as the core of its operations. "Social responsibility" means that Plxsur must find innovative ways to responsibly promote and sell new tobacco products, and ensure that this effort is visible to the public.
To achieve this goal, since its establishment, Plxsur's management team has frequently appeared at major exhibitions and forums. At the Global Tobacco and Nicotine Forum held in Seoul, South Korea in September 2023, Plxsur's Group Director of Science and Regulatory Affairs, Robert Burton, delivered a video speech titled "Tobacco and Nicotine," outlining the group's vision in five dimensions: compliance, prevention of youth access, recycling, responsible marketing, and child protection.
He proposed that the e-cigarette industry should adhere to the highest standards of integrity, and even surpass regulatory requirements when necessary.
One thing we need to remember is that this industry is still emerging and remains disruptive. Regulations are still catching up. Either regulations do not exist or they are being abused, but that does not mean we as an industry should not set the highest possible standards. What Plxsur is doing is not just for ourselves, we believe it is the benchmark that the entire industry should follow.
Robert Burton stated that the group "has established a set of standards that we believe are appropriate." Additionally, Plxsur also noted in their financial report that each of the 12 companies under their umbrella has now fully committed to adhering to Plxsur's six standards to address the industry's major pain points (product compliance, manufacturing safety, responsible marketing, youth access, child protection, and safety). As a self-proclaimed industry standard setter, does Plxsur really have such a significant impact?
In order to avoid strict blanket bans imposed by regulators, the e-cigarette industry generally hopes to strengthen regulations on the age limits for purchasers and enhance monitoring of incidents that occur in retail stores. "Age estimation" has thus become a new technology of interest in the e-cigarette industry. Plxsur's Puff Store is currently testing this technology in two stores in Italy and plans to expand it on a larger scale.
The impact of disposable products on the environment is becoming an increasingly serious issue. As more countries and U.S. states attempt to ban the use of disposable items, many companies are gradually phasing out these products. Martin Miller, Chief Business Officer of Plxsur, stated in an interview that their partner companies are working closely together to develop business strategies that encourage consumers to stop using disposable products. He specifically mentioned that their Italian partner, Puff Store, has successfully convinced many consumers who used disposable products to switch to refillable and open systems. He also emphasized that in the Italian market, sales of refillable and open systems have surpassed traditional disposable products. The entire Plxsur group is moving away from disposable products, with their Irish partner, Hale, already launching new refillable products and other partner companies continuously expanding their refillable product portfolio.
How Far can Synergy Effect Go: Will Going Public in Short Term be Ultimate Outcome?
From its financial reports and various development strategies, it is easy to see that Plxsur is attempting to establish itself as a "tower" by building a foundation based on compliance, governance, and reporting. The company is also maintaining contact with management teams of partners, providing training to help them acquire skills in submitting financial reports, engaging with regulatory agencies, and managing key clients.
Therefore, some industry insiders analyzed to 2FIRSTS that rather than being an "e-cigarette enterprise," Plxsur's positioning is more similar to a "financial tower providing training services." Plxsur selects leading or potentially promising vaporizer companies from various countries to cooperate with, exploring synergies and opportunities, ultimately aiming to achieve widespread market dominance.
However, in the end, because Plxsur does not own the 12 companies it collaborates with, its public status at the company headquarters is more similar to that of a small to medium-sized enterprise, rather than a true "giant" with a revenue of $1 billion. These independent companies have over 2,000 employees, while Plxsur itself has a team of only 11 people. Without a large enough income, enough employees, or enough assets—Plxsur does not need to disclose all its accounts at the company registry.
Is his next expansion strategy to raise funds through an IPO? According to documents submitted to the UK Companies House by Plxsur, the company's largest shareholding is currently 160,000 shares held by three parties: the first 160,000 shares are held by a company called Mustard Kicks, which is owned by Plxsur's Chief Technology Officer Chris Lord, Newns, and John McAvoy through another company CJLI Limited. German venture capital firm Sinobis Asset GMBH & Co KG and Swiss venture capital firm MD&C Creative Maison SA also hold 160,000 shares each.
Afterward, a fund managed by Stonebridge held 49,876 shares, with James Cox, the company's managing partner, being an investor and board advisor at Plxsur since January 2023; Django Davidson, founding partner of London-based Hosking Partners, holds a significant stake of 29,000 shares in the company. Davidson has previously invested in fast-moving consumer goods companies such as Obby, Brampton Bicycle, The Westbourne Drinks Company, and Nutmeg.
Another significant shareholder worth noting is Des Naughton, former CEO of Nicoventures, a subsidiary of British American Tobacco (BAT), who also holds 10,000 shares.
The "two-year billion" story, whether it will culminate in an IPO as a stage ending is currently unknown. Some industry insiders have told 2FIRSTS that the current trend of not wanting to operate long-term and being eager to cash out is prevalent across various industries, and the e-cigarette industry is no exception; investors wanting to secure their returns will pressure companies to go public. A senior financial professional at investment bank First Shanghai, in an interview with 2FIRSTS, stated that many companies, during the early stages of multiple rounds of funding, make some sort of commitment to investors to go public within a few years. Plxsur, which got its start in the "capital game" and whose majority of shares are held by venture capital companies, is still being watched for its next move in the financial market.
2FIRSTS will continue to monitor the development of new companies in the e-cigarette industry.
We welcome news tips, article submissions, interview requests, or comments on this piece.
Please contact us at info@2firsts.com, or reach out to Alan Zhao, CEO of 2Firsts, on LinkedIn
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