This article first appeared in The Edge Malaysia Weekly, on November 9 - November 15, 2015.
AMIN’s (not his real name) decision to delve into a somewhat grey business area — making liquids used in electronic cigarettes, or “brewing” as it is popularly known — had little to do with wanting to make big profits, lucrative though the venture has turned out to be.
Having taken up vaping in 2012 to help him get over his two-pack-a-day smoking habit, Amin simply wanted to see if he could brew a flavour for his personal use.
“In early 2012, it was not so easy to find e-liquids and the products were very limited. They came mostly from the US and China. Then suddenly, the next year and particularly in 2014, local brewers started popping up everywhere and home-made liquids started flooding the market. I thought, if they can do it, then I can do it too.
“I wanted to make my own flavour to vape. So, I watched YouTube videos as research and asked a few friends how to do it, then, started buying the raw materials on a small scale from here and there, and began my many mixing attempts until I found the right ‘recipe’ for me.
“One day, I was hanging out at a friend’s vape shop and he tried out what I was vaping and really liked it. He said, ‘You give me 1,000 bottles and I’ll try to push them for you’. I was surprised but I did what he asked, and after just two weeks, he called to tell me my liquids were all sold and he needed another 1,000 bottles. That’s how I got into the business, in 2014,” Amin tells The Edge as he vapes, exhaling thick plumes of vapour in the small Petaling Jaya office where he holds down a day job. “I work in the creative industry.”
In his early 40s, Amin speaks of his growing business and why he hopes the government will regulate the industry. “Even if regulation involved taxation, I’m willing for it.”
He operates his brewing business out of a “lab” in a small office lot in the Klang Valley and employs three workers, but does all the brewing himself. His initial investment in the business was RM15,000, mainly on R&D, but he says it can be a lot less for others. All in, today, he has invested about RM30,000.
Producing 20,000 to 30,000 bottles of e-liquid, or “juice”, a month on average, he considers himself just a small player. Some of the bigger players produce 100,000 to 200,000 bottles a month. It’s a high-margin business and he admits to making a net profit of about RM150,000 a month, on average.
“I sell each 30ml bottle to my distributor at RM15. My cost price is between RM7 and RM10.” When it ends up at retail outlets, it is sold for RM40.
Asked where he gets his ingredients from — there are typically just four that go into making e-liquids, namely propylene glycol (PG), vegetable glycerine (VG), liquid nicotine and flavouring — he says: “I get the flavouring directly from factories that produce it for food industries. You can get your PG and VG from the same factory and they come with a (safety) certificate and it’s halal as well.
“The whole point of me wanting to get into brewing was so I would know if what I was inhaling was safe — because I vape my own liquids only. So when I started, I personally sent one of my liquids for a lab test at (*he names a credible government-owned laboratory*) and the result showed there was no harmful substance in my liquid.”
When asked where he sources his liquid nicotine, he looks distinctively uncomfortable. “That’s a sensitive topic. The nicotine, mostly we get it from the US and China. Other people import it and I buy from them.” One of the reasons this industry is controversial is that brewers are able to obtain liquid nicotine quite easily, when in fact, the sale of the liquid is controlled under the 1952 Poisons Act. It can only be sold through licensed pharmacists and medical practitioners.
In the Klang Valley alone, Amin believes there are at least 50 to 60 brewers, but he says this is a conservative estimate. “There seems to be one new brewer popping up every day these days. We used to know who brewed what, but now, you see new ones popping up on Facebook and some using phone messaging to reach out to customers, and we don’t know who they are anymore. I don’t know if they take as much pains as I do to make sure the ingredients are safe and if their brewing is done hygienically.”
Amin says he’s keen to invest in a “clean room”. “It’s a big investment and could involve RM100,000. But I’m ready to do it if the government says it will regulate the industry.”
And if the government decides to ban it? “Well, the industry will still go on, it’ll just go underground. We’ll still continue for as long as there is demand. It’ll end up being like the illegal DVD market.
“The government will lose money from us. Many people in the industry are actually willing to pay tax if it is regulated. It’s better for the government to get it regulated, so only players that are serious can continue [with the business]. We create a lot of jobs.”
For now, his business is only subject to company tax. “The company that I set up to do this business is categorised as ‘general trading’. It is difficult for people like us to put the money we make in banks because ... how do we explain the large sums? But anyway, most of what I make is reinvested in the business,” Amin says.
He recently found a distributor that will market and sell his products abroad. “These days, the brewers are making the liquids to be pushed overseas because in Malaysia, there are just too many of us, too much competition. We want to see if we can play outside [the country], just in case the government decides on a ban.”
Amin is, however, hopeful the government will take steps to regulate the industry. “When I started the business, I had no idea it was going to take off the way it did. Business aside, I personally think vaping has changed my life for the better, healthwise, and so I feel it is better for me to vape than smoke.
“Shouldn’t the government give us the right to make personal choices on what we think is good or bad?”