Germany - 1st to See Disposable Replaced by Pod Vapes?

In recent years, the disposable e-cigarette market in Europe has grown rapidly, but this growth has also highlighted the problems arising from a lack of regulation. This rampant growth of the industry has raised public concern, with the focus mainly on negative issues such as attracting teenagers, environmental pollution, and health impacts.

To solve these problems, regulatory authorities in many European countries have started to take strict measures. For example, Germany imposes heavy taxes on e-liquid; the UK delists products that exceed standards on a large scale; Denmark bans flavoured e-liquids; Portugal completely bans flavoured tobacco products, and so on. These measures have filled the future of the disposable e-cigarette market with uncertainty.

Are disposable e-cigarettes no longer popular?

At the e-cigarette exhibition in Stuttgart, Germany, Vincent, Director of Western Europe of VOOM, told 2FIRSTS that due to the increase in Germany's vape juice tax, the cost of disposable e-cigarette products has risen remarkably, and as a result, dealers no longer welcome these products as they did before.

It is estimated that the current price of a 10ml bottle of vape juice in Germany is about €10 (including VAT). After adding the e-liquid tax of €1.6 and adding VAT, the final price will increase by a total of €1.9. Germany's e-cigarette tax is set to increase every year, and by 2026 the price of disposable e-cigarette products in Germany will double, from €0.16/ml to €0.32/ml.

Simon Bauer, chairman of the German Smoke-Free Alternatives Association (BVRA), believes that in addition to rising costs, disposable e-cigarettes in the European market also face two major challenges: environmental protection and teen smoking. The constantly strengthening regulatory risk further weakens the market. He suggests that Chinese manufacturers abandon disposable e-cigarettes and turn their attention to other types of e-cigarette products.

Disposable e-cigarettes are not only questioned in Germany but also criticized in the UK for environmental disturbance and incidents of e-liquid overfilling compliant levels. At the e-cigarette exhibition in Birmingham, UK, 2FIRSTS asked several brand merchants about the development trend of the e-cigarette market. Some brand merchants stated that the development of disposable e-cigarette products is facing a public dilemma, and the leading category in the e-cigarette market in the future may change.

What will prevail after disposables?

So, if disposable e-cigarettes exit the market, which type of e-cigarette product will the new opportunity fall on? 2FIRSTS received the same answer in Germany and England: cartridge-replaceable e-cigarette products (pod vapes).

Recently, Ebrahim Kathrada, the Managing Director of UK dealer Aquavape Company, pointed out in a report that the e-cigarette industry is currently developing in the direction of cartridge-replaceable e-cigarette products and predicted that the share of this product in the UK market will exceed ￡500 million pounds.

2FIRSTS interviewed several e-cigarette manufacturers at the e-cigarette exhibition in Stuttgart, Germany, and Birmingham, UK, and many brands stated that the development of disposable e-cigarettes is about to reach a turning point, and cartridge-replaceable e-cigarettes may become the "beneficiaries" of this turning point. Vincent, stated that the popularity of disposable e-cigarette products in Germany is declining, and the market is turning to pod vapes.

When visiting retail stores in Germany, 2FIRSTS found that many store owners/managers hold the same view. Many of their opinions were on the line that increasing vape liquid taxes and the coming EU battery directive will force disposables out of the market. The EU battery directive will require all consumer electronic products to have replaceable batteries and disposable vapes are also encompassed in this category.

At the same time, some well-known disposable e-cigarette brands, such as ELFBAR, ELUX, and KIWI have also launched their own e-liquid brands in the European market. ELFBAR and ELUX both stated that the purpose of launching disposable e-liquid brands is for environmental protection and to allow users of refillable to experience their disposable products' flavours. The trend of top disposable e-cigarette brands entering the e-liquid track seems to confirm the industry's expectation for categories other than disposable e-cigarettes.

According to EU and UK regulations, the e-liquid capacity of e-cigarettes must not exceed 2ml, so the European market can only sell e-cigarettes with a smaller volume. This regulation not only makes many e-cigarette manufacturers take the risk of injecting excessive e-liquid, but also because of the small volume, it makes the environmental problem of disposable e-cigarettes more prominent. However, the replaceability of pod-system e-cigarette products just makes up for this shortcoming of disposable e-cigarettes. It can be expected that pod-system e-cigarettes will become an important measure to curb irregularities and pollution in the disposable e-cigarette industry.

Will Germany become the first market in Europe to abandon disposable e-cigarettes?

After the transition period of the e-liquid tax in Germany, German authorities have begun to strictly check tax evasion and issues of untaxed e-cigarettes in retail stores. At the e-cigarette exhibition in Stuttgart, German customs conducted a surprise inspection. They carried out fines, confiscated products, and even elevated to arresting exhibitors for storing products without tax labels or proper documents. According to German customs, they inspected 15 booths and found 11 booths had violations. These booth operators' products were confiscated, totaling 46,000 euros in unpaid tobacco tax.

Simon Bauer notes that if German customs were to send more personnel to search, there would be more exhibitors being punished at the exhibition. In addition, since German customs cannot arrest foreigners, they will impose heavy fines on them.

Simon told 2FIRSTS that the German government insists on implementing the e-cigarette tax policy, which not only leads to the vigorous development of the e-cigarette black and grey market, but also has an impact on the retail industry, "At present, nearly half of the e-cigarette retail stores in Germany have closed."

Given the high vape juice tax and environmental pressures, it is not surprising that the product direction of the German e-cigarette market is changing. However, the development trend of e-cigarette categories in Germany still needs to be proven in the market. The market demand and consumer choice will ultimately determine the future of cartridge-replaceable e-cigarettes in Germany.

Vincent voiced that the German e-cigarette market is still large. Although the tax on e-cigarettes in Germany has increased and costs have risen, many have not given up this market and will strive to adapt to policy changes.