Russia has a population of 130 million people, of which 32% are smokers. Among these smokers, approximately 20 million are 28 years of age or above, accounting for 94% of all smokers. This large base of smokers makes Russia an important consumer market for tobacco and electronic cigarette products. While Chinese brands and electronic cigarette products dominate the Russian market, local distributors have reported the emergence of domestically-produced brands. While still limited in number, the development of a domestic electronic cigarette industry in Russia may pose a challenge to Chinese companies due to factors such as transportation costs, tariffs, and business models.
During the VAPE CLUB SHOW, an electronic cigarette exhibition in Russia, JIJA, self-proclaimed as one of the largest electronic cigarette distributors in Russia, gave an interview to 2FIRSTS regarding the aforementioned topic. The following is a translated transcript of the interview provided by 2FIRSTS.
Sales manager of Russian distributor Jija (Image source: 2FIRSTS)
Interviewee: Jija Sales Manager
Jija Distributes 90% of Chinese Brands in Russia.
Jija's distribution network now covers the entirety of Russia, offering a range of products including refillable and disposable e-cigarettes, e-liquids, and hookahs. As a wholesale supplier, Jija has over 3,000 trading points and has become one of the largest distributors in Russia. They are able to provide a variety of products and services to retailers, including transportation of goods to stores in any location via delivery companies.
Jija has two standards for collaboration: First, high-quality products at reasonable prices, and second, products packaged professionally to gain consumer trust.
Jija's sales manager stated that they prefer to work with large Chinese companies that offer brands with competitive market appeal and meet designated quality standards, such as Vabar, Inflave, and Cool Play. Chinese e-cigarette product information is translated into Russian and sold successfully in Russia, with 90% of Chinese brands being sold through Jija. For instance, the ELFBAR brand sells out quickly once it hits retail stores. In addition to promoting high-quality brands, Jija also attempts to increase brand recognition for lesser-known brands. They are currently working to promote the Lost Mary brand to enhance its visibility.
Russia to achieve self-sufficiency in production and sales, faces challenges from China in the Russian market.
In the field of e-cigarettes, such as nicotine salts and alkaline liquids, there are numerous domestic manufacturers in Russia. However, Jija still chose to partner with Chinese brands. According to Jija's sales manager, while the profit margins are not high for importing e-cigarettes from China, it would still be more expensive to establish a separate production line for electronic cigarette technology equipment using Russian domestic e-cigarettes. Therefore, Jija has decided to reduce the middleman and purchase e-cigarette products directly from China.
Jija stated that they will soon achieve autonomous production of disposable electronic cigarettes under Russian brands such as VVS and Soak. The entire production process for these electronic cigarettes will take place entirely within Russia.
Currently, some Russian e-cigarette brands are attempting to compete with Chinese brands. Russian products are priced more affordably, and if Russian brand companies establish a complete e-cigarette production chain and introduce cashless payments (which can be utilized in integrated distribution channels), they will have a competitive advantage in the market. Chinese companies exporting to Russia must pay customs consumption tax, prohibiting them from covering the entire Russian market with cashless payments. However, this is highly advantageous for Russian local manufacturers who do not need this step to easily and legally enter the Russian market.
Jija emphasized that competition is necessary for the market to thrive. Some brands emerge victorious while others are forced to leave. Brands must make sufficient investments in marketing. Some choose to work with Jija, who assists them in remaining in the market and encourages Russian stores to sell their products. Brands that are willing to invest in marketing experience rapid growth, while those unwilling to invest choose to exit the market.
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