High Levels of Illegal E-Cigarette Trafficking in Russia.

According to estimates from the Nicotine Industry Manufacturers' Alliance, the proportion of illegally trafficked electronic cigarettes and liquids is at an alarmingly high level.

On July 6th, in Moscow, TASS reported that in 2021, 1 in 7 electronic cigarettes and 1 in 10 e-cigarette oils in Russia are produced illegally. This was highlighted in a study by SPINI, the Nicotine Industry Manufactures Alliance, which brought together participants in the e-cigarette market.

According to a study, industry associations estimate that one-seventh of electronic cigarettes and one-tenth of electronic cigarette liquids in Russia are illegally produced.

SPINI estimates that the proportion of illegal smuggling of electronic cigarettes and liquid is at an extremely high level. "Russia has a significant number of legal participants who are certainly engaged in dishonest competition with manufacturers and importers of illegal products. At the same time, they sell them under the label of well-known brands," said Dmitry Vladimirov, director of SPINI, quoted in the information.

According to him, gray market imports also pose an additional threat to legal market participants and consumers. In fact, these are legal products, but in the past they were imported through customs without paying taxes and could be sold. Storage conditions may also not be observed, which affects product quality," said Vladimirov. SPIN's research on the volume of counterfeit ESDN markets in 2021 shows that over 49 million fake e-cigarettes were sold in the online sector last year, worth about 25 million rubles in total.

Vladimirov stated that due to a lack of proper control, the black market share is increasing each year. According to experts from SPINI, illegal sales in 2022 could exceed 30 billion rubles, resulting in budget losses of over 5 billion rubles annually.

Solution to the problem.

Digital tagging is considered to be the most effective tool for "segmenting" the SPINI market and protecting the legal department. The "honest label" tag has been in use for many years for cigarettes, another category of "tobacco", and has recently spread to tobacco sticks. It makes logical sense for ESDN and nicotine-free e-liquids to be included in the surrounding areas, and the industry has high hopes for this," said the CEO of SPINI.

He believes that the electronic cigarette labeling experiment that began in Russia on February 15 can be completed ahead of schedule, with the tags being introduced in a mandatory mode from March 1, 2023, starting with a deadline of November 1, 2022. According to the union, this is enough time to sell the unmarked legal balance and prepare the industry.

At the same time, SPIN strongly opposes the proposal to completely ban ESDN in Russia. "It has been repeatedly proven that any ban only fuels interest. These often heard measures only destroy the tax-paying legal sector, and the black market will continue to operate.

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