US vape market reshuffle: shortage, replenishment, restruction

Under the regulatory storm, the US vape market is undergoing a deep reshuffle

1.  The US vape market has experienced significant fluctuations. Since the strengthening of law enforcement in the United States in mid-2024, there has been a cycle of “shortage filling reconstruction” in the market, with top brands cutting off supply and causing a supply vacuum.
2. Shortage period triggers high leverage risk. US vape distributors place orders through a “10% deposit+settlement after customs clearance” model, amplifying demand and transferring risks to the Chinese manufacturing end, resulting in tight cash flow and inventory backlog.
3. The resumption of supply brings about structural reshuffling. After the top brands resumed shipments, channels quickly returned to concentration, forcing small and medium-sized brands and supplementary products to be eliminated, and the industry entered the stage of “credit elimination”.
4. Compliance and innovation have become a new watershed. Enterprises are generally hesitant to apply for PMTA, as high costs and long cycles have deterred most of them; At the same time, “non nicotine formula” products such as Nixodine and 6-methylnicotine have emerged and are in a regulatory gray area.

The severe fluctuations in the US vape market have not only reshaped the trade structure, but also changed the psychological expectations of Shenzhen’s vape manufacturer

1. Shortage: Regulatory vacuum triggers market disruption

Starting from mid-2024, the US Food and Drug Administration (FDA), in collaboration with customs and state law enforcement agencies, will strengthen the seizure of unauthorized vape products.
The first to be affected was the G vape brand, a leading brand with a long-term market share in the United States. Starting from May 2025, its products have been repeatedly intercepted during customs clearance and warehousing. As inventory runs out, there is a comprehensive shortage of products at the retail end in the United States.
During that time, the vape shelves were empty and there was no stock when consumers asked, “recalled an American distributor.
When the “vacuum” signal reaches the Shenzhen vape manufacturing circle, emotions are instantly ignited. The six major dealer systems in the United States almost simultaneously send inquiries to multiple factories in China.
These dealers have long been associated with the G vape brand and rarely have contact with second tier brands. The sudden order made many companies think that an opportunity had come.
At that time, many factories felt like they were ‘chosen’, as if they had a ticket to enter the US market, “said a Shenzhen e-cigarette factory.
This excitement quickly spread throughout the supply chain, becoming the trigger for the ‘fill in trend’.

2. Supplement: Amplified demand and high leverage trap

American vape distributors generally use the “10% deposit+settlement after customs clearance” model to place orders in order to seize the source of goods.
This structure balances risks on the surface of trade, but in reality shifts all pressure onto the supply side.
For Chinese vape manufacturer, each batch of orders means a large amount of self advance funding and long payment terms; And US vape distributor has almost zero risk.
“They placed orders for dozens of factories at the same time. Whoever can send them out first will become the supplier, “explained by a Chinese vape practitioner.
In this competition, demand is amplified layer by layer. Every factory thinks they have received a ‘big order’, but the real market capacity is far from growing.
The high leverage mechanism has formed a fragile financial chain – as long as a supply signal appears, the entire chain may collapse.
According to the interviewee’s recollection, some Shenzhen vape companies increased their shipment volume to three times that of previous years within two months, but the payment terms were extended to 90 days or even longer.
Seemingly booming business, in fact, cash flow has been drained, “said a contract factory manager.
The upstream raw material supply has experienced a brief prosperity. The industry generally believes that H e-liquid factory (one of the largest e-liquid factories in the industry) and C atomizing core factory (a leading manufacturer of atomizing cores in the industry) are the biggest beneficiaries of this round of “filling dividends”.
“The whole vape device factory cannot make money, but e-liquid and atomizer cores are real cash businesses, “commented an industry insider.

3.The Spread of Illusion: From Warehouse to Port

The trend of filling vacancies has extended from Shenzhen to ports in the United States.
The payment terms of distributors are generally divided into three sections: 10% payment upon placing the order, partial payment based on the sales situation after entering the warehouse, and final payment to be settled after the sales are completed.
“This is a typical ‘write off period’, where quick sales lead to quick settlements, “said a insider.
This flexible payment term causes the warehouse inventory to rapidly expand. Distribution centers in multiple states in the United States are filled with containers waiting for customs clearance.
Some companies have even started to bear the storage costs themselves, just to maintain the nominal cooperative relationship in the contract.
“On that time, everyone was afraid of losing customers, “said a supply chain manager.” As long as customers requested, we would deliver the goods first.”
He revealed that some containers have been held by distributors for a long time after arriving in the United States, without final payment or returns.
During the same period, a new brand featuring the appearance of a hookah received a letter of intent from a US distributor for one million devices.
“They haven’t even finished the prototype yet, but the customer has already placed an order”said a person familiar with the transaction.
One batch of 70000 products was seized by customs after being sent to the United States. This order has become a typical “high-risk sample” in the replenishment frenzy.

4. Refactoring: Head Regression and Channel Re concentration

Entering the fourth quarter of 2025, G vape brand will resume shipping.
The six major vape distributors have been reactivated, and the US market is experiencing a “surface reset”.
The shelves of national channels are once again occupied by top brands, and supplementary products are forced to give up space.
“They don’t need any promotion, once the system is restored, the goods will naturally sell, “said a distributor representative.
For manufacturers who bet all their cash flow during the shortage period, this reset is almost fatal.
The final payment has been delayed, inventory is unsold, and storage costs have skyrocketed – many second tier brands have had to give up the US market.
During this process, some companies realized the “uncontrollability” of the cooperation model.
“Even if the six major vape distributors have no subjective intention, their behavioral structure will automatically form a ‘cleaning effect’, “said an source
He believes that the resumption of supply not only brings about market recovery, but also a round of credit elimination.
A researcher L, who has long been concerned about the vape industry, explicitly pointed out that this is the classic Bullwhip effect. A few months ago, the market panic caused by the recent enforcement in the United States led to a rapid shortage of goods, which triggered a distorted and amplified demand that was transmitted to the upstream of the supply chain. There are no new things in the world, and business rules will not change: in the next few months, there is no need for US regulatory agencies to enforce the law, and the mutual bargaining between the goods hoarded in the channels can cause players in this industry to “kill each other”.
At the same time, there are reports in the industry that G vape brand’s new round of financing documents does not include the US market.
A respondent familiar with the brand’s operations stated that this means its business in the United States is still operating in a ‘non compliant mode’.
“They won’t give up on the US market, but they won’t include it in their reports, “said the interviewee.

5. The Illusion of Manufacture: Narrative and Reality of ‘Made in USA’

Shenzhen vape manufacturers.
Some manufacturers issue certificates of origin through local companies and export to the United States under the name of “Made in Southeast Asia”.
“This is a legal and compliant trade operation, but it has nothing to do with the actual production location, “said a logistics company representative.
A few companies are attempting to truly localize production.

6. Channel Rewriting: The Survival Logic of Sinkers

When national channels restore order, some small and medium-sized vape brands choose to “avoid the center”.
A medium-sized brand with its own warehousing and distribution team in the United States established its own local operations even before the market turbulence.
Three employees and a small warehouse, they personally pack, ship, and run the store.
“The profit is not high, but the cash returns quickly, “said a person familiar with the model.
Similarly, a well-established electronic cigarette brand that has been investing in the US market for a long time has been continuously investing manpower and budget for many years. Despite limited sales, it has accumulated a stable channel network.
When the shortage period arrives, this’ ground based operation ‘becomes an advantage instead.
“Other competitors are betting on orders, they are guarding customers, “said the S person.” This model is more resilient in times of chaos”.

7. Compliance anxiety: wait-and-see becomes industry consensus

At the compliance vape level, anxiety is widespread.
Some respondents indicated that vape brand only eligible to consider entering the PMTA ( Premarket Tobacco Product Application) process if their monthly shipments remain stable at 4-5 million units or more.
The investment in PMTA is too much and the cycle is too long, “said a contract manufacturer.” Most companies only dare to wait and see.”
Some china vape manufacturers are even preparing to “test the waters” with the encouragement of distributors – for example, a contract manufacturer encouraged by a large channel to participate in PMTA has been told that if they complete PMTA, they will receive “deep cooperation”.
But a insider person bluntly said, “They don’t have this foundation and don’t have time.”
At the same time, the frequent mixing of the terms “document” and “license” within the industry has led to market misunderstandings. The interviewee emphasized that products that have obtained MGO (FDA Marketing Granted Order) are not among the recent enforcement crackdowns; The main impact products is because that have not yet obtained MGO, and even holding STN/acceptance letters/filing documents does not necessarily mean stable sales in the United States.
“The acceptance letter or STN is not a moat, but more like a ‘liquid asset’. “Said the insider person.” Some people hang it on the wall as endorsement, some use it to discuss financing, but the real decision on whether it can be listed and sold stably is whether to obtain MGO, not these intermediary documents.

8. Innovation and Grey Zone: The Rise of Non Nicotine Formula

The pressure of compliance drives product innovation. The US market has seen the emergence of “non nicotine formulations” represented by Nixodine and Metatine (6-methylnicotine).
These compounds provide a similar experience in the absence of nicotine.
Some American brand e-commerce websites have launched products labeled as “0-nic” or “nic free”.
They claim to be ‘non nicotine technology’, but from a chemical perspective, they are still in a regulatory ambiguity zone.
This is the gray area of the industry, “said an analyst,” it’s both innovation and risk
Boughner stated that distributors have become the “gatekeepers” of the market, placing greater emphasis on documentation rather than price – only brands that can provide PMTA acceptance letters, testing reports, and complete label information can enter the shelves.

9. Market Reflux: Parallel Recovery and Restructuring

According to industry data from Dank Smoke report. China’s vape shipments to the United States have recovered to approximately 100 million units per month in October. China Vape Export Rebound To 1.098 Billion USD in October
The shortage period has ended, and the flow of goods has accelerated again.
However, unlike in the past, this return is accompanied by centralization – fewer channels, tighter payment terms, and more intense competition.
The US market appears to have regained order on the surface, but the underlying logic has changed.
The competitiveness of enterprises is no longer based on scale or price, but on cash flow, compliance, and channel control.
“Resumption of supply does not mean a reset, “said the insider person.” Some people win back the market, while others are permanently eliminated.”

10. Surface recovery, deep reconstruction

Shortage reveals the fragility of the market, filling up creates illusions, and replenishment drives restructuring.
Within a year, the US vape market completed a cycle from chaos to concentration, from blind expansion to rational contraction.
In this cross-border game, no one is completely safe.
The vape manufacturing industry in Shenzhen remains active, but emotions are more cautious; The channel system in the United States has become more stable, but even more closed.
The surface of the market is returning to calm, while the real reshuffle is still ongoing.