This article first appeared in The Edge Malaysia Weekly, on November 9 - November 15, 2015.

THE rising popularity of vaping, which is perceived to be a healthier substitute for cigarettes, has led to many young entrepreneurs jumping on the bandwagon to get a slice of the pie.

Vape Empire Sdn Bhd stands out in the crowd, establishing 50 stores nationwide in the short span of two years.

CEO Zac Oh takes pride in Vape Empire being the biggest distributor of vapourisers and e-liquids not only in Malaysia but also globally, in terms of the number of outlets it has.

He tells The Edge that the company is still looking for opportunities to grow despite the government’s decision to crack down on the vape business. Vape Empire is targeting to have 100 outlets in the country by next year.

Last week, the government said it may regulate the vape business as it does cigarette manufacturing. The upcoming regulations — something that vape players have never known before — are likely to change the business landscape tremendously with the possible imposition of excise duty.

Already vape stores were raided in several states, with e-liquids — commonly known as “juices” — confiscated because of their nicotine content, which the government deems illegal.

“Yes, they’re already conducting raids. They’re raiding everyone all at once, confiscating the juices. Our operations are very much affected. We’re waiting to see if there are any other updates and are working on how to resume business. But for now, we are just waiting,” Oh says when contacted for an update on the government action.

He adds that as at Friday, 11 Vape Empire outlets had been raided by the Ministry of Health. 

Vape Empire started out in 2013 as an enterprise with a single store in Puchong. Back then, vaping was still in its introductory years — Oh recalls that there was only one other store in Puchong besides Vape Empire.

In just two years, the market boomed as the number of vapers and vape shops grew by leaps and bounds around the country.

“It’s crazy now. Previously, it was only us and another guy operating in Puchong. Now, in Puchong itself, there are at least 50 stores. There are also those without physical stores that do deliveries, selling through social media. It’s quite hard for us to gauge the size of the market because [almost] everyone is involved in the vape business,” says Oh.

Despite the growing number of competitors, he says Vape Empire is still doing well. “Comparing the situation six months ago with now, we are still maintaining our sales. There has not been a drop. This is because we are very service-oriented and our pricing is among the best in Malaysia.”

He says the company has seen sales growth of more than 1,000% since it started out, raking in revenue of about RM60 million a year, even rivalling Main Market-listed companies’ revenues.

“As a group, we get around RM5 million per month in revenue. We have a few distribution channels but definitely, our main channel is our retail stores. We also sell online and distribute to smaller stores around the country,” he adds.

Vape Empire also manufactures its own brand of e-liquids, which it sells to local stores as well as exports. “We export our juices to France, China, Taiwan, Brunei, Australia and Indonesia. We have partners in these countries to distribute our products,” says Oh.

On the company’s expansion plans, he says it is looking at opening shops in Perlis and Terengganu, the only two states it has yet to enter. It is also keen to venture overseas, particularly in countries that have legalised vaping.

“Some of the countries we are looking at are the US, the UK and Australia,” he says, adding that the company’s intention is to open shops there.

It could be a strategic move for Vape Empire to venture abroad amid the current uncertainty over the Malaysian government’s stand on vaping.

“Right now, vaping is a grey area. For us, we are definitely going all out to work with the government to get vaping legalised. That is why we are also involved with Mevta,” Oh says, referring to the Malaysia E-Vaporizers and Tobacco Alternative Association.

He notes that with the large number of vape stores and distributors in the country, there are bound to be irresponsible parties trying to make a fast buck by selling to minors. Also, there have been cases where e-liquids laced with illicit drugs were offered for sale.

Oh says these are some of the issues the government is concerned about.

He adds that due to the lack of standards and proper studies on vaping, it is difficult to determine if the ingredients and materials used by the producers are in fact safe for consumption. “So, when the regulations come in, there will be some form of control over the producers, over what kinds of materials can be used.”

However, with or without regulations, Oh believes that the local vape market is here to stay. “The vape market in Malaysia will not die. We have too many users and we are way ahead in terms of hardware. We Malaysians are one of the best hardware makers in the world and we are exporting the products to the US and Europe.

“As for juices, we are second to the US and are also exporting them to several countries. Brewers have actually been travelling around the world, trying to market their products, and we are proud of the local producers.”

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