Puffmi: Rising in Russian Market Amidst Challenges of Regulation and Gray Market

On December 16th, at the VAPE CLUB SHOW 2023 e-cigarette exhibition in Russia, 2FIRSTS interviewed Puffmi's regional sales manager for Russia, Yoon Song-yu, to explore the rise of the Puffmi brand in the Russian market and the challenges it currently faces.

According to Yin Songyu, Puffmi officially entered the Russian market in December 2022, and their 4,500 units of disposable products achieved impressive sales performance in the Moscow area.

Yin Songyu stated that behind this success lies the outstanding features of their products and the clever implementation of market strategies.

However, the Russian market is not without its challenges.

Yin Songyu stated that the current market is facing dual challenges. Firstly, the Bai Guan market is under regulatory pressure. In January 2024, Russia will implement a new e-liquid tax of 42 rubles per milliliter, along with a 20% value-added tax. This means the cost will significantly increase as it will be the sum of the value of the goods plus tariffs plus the e-liquid tax, all multiplied by 20%. Additionally, a new import license system will be introduced in the months of March and April next year, further increasing the difficulty of doing business in the Bai Guan market.

Another challenge is that the market capacity of the Russian gray market is still enormous, accounting for 80% to 90% of the market share. Yin Songyu stated that the future is still uncertain for both brand manufacturers and distributors. Many brands are waiting for leading enterprises to take the first step while also exploring strategies to expand their channels in the Russian market.

Yin Songyu predicts that the market will gradually stabilize from March to May next year, and small and medium-sized enterprises will also find solutions. The implementation of regulations will lead to an increase in the market share of legitimate products while reducing the market share of illicit products. However, retail merchants will need to strike a balance between the two in order to avoid high costs and retail price increases. During this adjustment period, small and medium-sized enterprises will gradually adapt and find new paths for development.

However, he also stated that Puffmi is making small-scale technological preparations to cope with future regulations in Russia.