Key Points
- Regulatory Shift: South Korea’s revised Tobacco Business Act brings nicotine-containing vaping products under tobacco regulation, increasing requirements for licensing, taxation and compliance.
- Manufacturing Pressure: Higher entry barriers are pushing some small and medium e-liquid companies to adjust strategies, including reducing production, shifting to distribution or using OEM/ODM manufacturing.
- Supply Chain Change: Korean companies are demanding more from overseas suppliers, with source verification, testing documents, batch traceability and local packaging compliance becoming increasingly important.
- Channel Transition: Online sales restrictions are driving market adjustments toward offline retailers, duty-free channels and tourism-related sales, while existing inventory cushions the initial impact.
- Future Regulation: Nicotine analogues such as 6-methyl nicotine (6-MN), nicotine-free products and DIY mixing are emerging as potential regulatory challenges for global nicotine markets.
2Firsts
July 16, 2026
South Korea’s revised Tobacco Business Act and related e-liquid rules are pushing the country’s vaping sector into a compliance-driven transition, prompting smaller manufacturers to reassess production and leading some companies to use OEM and ODM production, including in China, according to Korean market specialist Sam Kim.
The law, which took effect on April 24, 2026, brought nicotine-containing vaping products, including synthetic nicotine products, under tobacco regulation. Kim told 2Firsts in a written interview that the market has not disappeared, but is being reshaped by licensing, taxation, online sales restrictions and product-compliance requirements.
The shift is also raising documentation and packaging demands for overseas suppliers, particularly Chinese companies supplying synthetic nicotine, e-liquid ingredients, finished e-liquids and packaging.
New tobacco rules raise entry barriers for e-liquid makers
The most visible change since the law took effect is that nicotine-containing vaping products are now regulated as tobacco products, Kim said.
Before the revision, synthetic nicotine products were not classified as tobacco products under Korean law, making manufacturing and sales comparatively straightforward. Since April 24, both tobacco-derived and synthetic nicotine products have been treated as tobacco products, making manufacturing without a tobacco manufacturing license no longer possible.
Kim cited several licensing thresholds under the new framework. Liquid tobacco manufacturers must have KRW 10 billion, or about USD 7 million, in equity capital; annual production capacity of at least 400,000 liters, equivalent to about 13.3 million 30 mL bottles; and at least five qualified employees with three or more years of manufacturing or quality-management experience.
Those requirements have changed the market entry threshold for e-liquid companies, especially smaller manufacturers that previously operated in a more flexible regulatory environment.
Stockpiles delay price shock as small manufacturers cut back
Despite the regulatory shift, consumer demand has remained relatively stable so far. One reason is inventory.
Many domestic vaping companies built up enough stock before April 24 to cover about six months to one year of sales, Kim estimated. Manufacturers, wholesalers, retailers and some consumers increased purchases before the law took effect in anticipation of tighter rules and higher prices.
As a result, products manufactured before the law took effect remain widely available. Newly manufactured products now carry significantly higher production costs because of tobacco taxes, but consumers have not yet experienced a substantial increase in retail prices.
Most companies are prioritizing the sale of existing inventory rather than increasing new production, while monitoring regulatory developments and preparing new product strategies.
Kim said the two-year reduced-tax period is giving the industry time to adjust to the new licensing and tax framework, but he does not believe it will remove the market impact altogether.
“Once the reduced tax period ends, the market is likely to undergo another significant adjustment as companies fully transition to the new regulatory and tax framework,” he said.
Manufacturers are already feeling more direct pressure. Small and medium-sized companies with limited capital and resources have been hit hardest, while importers are becoming more cautious about introducing new products because of stricter licensing requirements and higher tax costs.
Kim identified four common responses among manufacturers: stopping production and selling existing inventory; shifting production to OEM or ODM manufacturers, including in China; moving into nicotine-free or nicotine analogue products; or reducing operations and exiting the vaping market.
The market itself remains substantial. South Korea still has about 2,000 vape shops and around 60,000 convenience stores that sell vaping products, based on figures provided by Kim, suggesting that the sector retains a broad retail base even as the regulatory framework tightens.
Online limits push sales toward vape shops and duty-free channels
The new law has also changed distribution.
In South Korea, online sales of tobacco products are generally prohibited. Before the revised Tobacco Business Act took effect, synthetic nicotine products were not legally treated as tobacco products, allowing them to be sold online. That helped the domestic vaping market grow rapidly through online channels.
Since the revision, newly manufactured or imported nicotine-containing products are classified as tobacco products and can no longer be sold online. Products manufactured or imported before the law took effect had been legally distributed as general consumer products, however, and some of those products are still being sold online while inventory remains available.
Kim said the issue has been widely discussed by industry and media and is expected to continue until pre-law inventory is fully sold.
As online sales become more restricted, the market is gradually shifting toward offline distribution.
Independent vape shops can obtain tobacco retail licenses, but they must go through the same approval process as traditional tobacco retailers. That includes local-government approval and compliance with local requirements, including minimum-distance rules between tobacco retailers. In some areas, those requirements create practical barriers for new businesses, Kim said.
Companies are also exploring channels beyond traditional vape shops, including duty-free stores, tourist shopping areas and export markets.
Based on the figures Kim provided, South Korea received about 19 million international visitors in 2025, up around 16 percent from the previous year, while the number of foreign visitors using duty-free shops rose by about 17 percent, from 9.33 million to 10.92 million. Demand from Chinese and Japanese tourists buying vaping products in South Korea is being viewed by some companies as a new opportunity, he said.
Bigger compliance burden may favor better-capitalized players
The final structure of South Korea’s e-liquid market remains uncertain.
The industry is still in a transition period. Pre-law products are still being sold online, and existing inventory continues to move through offline stores. As a result, the full impact of the revised regulations has not yet become visible.
The uncertainty is affecting large companies as well. Philip Morris International had announced plans to launch a new closed-system e-liquid vaping product in South Korea, but the launch has been delayed, according to Kim. KT&G has also not announced a clear strategy for expanding its e-liquid vaping business, he said.
“In my view, this suggests that even the largest companies are taking a cautious approach while assessing the new regulatory environment and market conditions,” Kim said.
Over time, regulatory capacity may become a more important competitive factor. Obtaining a tobacco manufacturing license, maintaining quality-management systems, investing in production facilities and managing higher tax costs require significant capital and compliance resources.
Companies with stronger financial resources and regulatory expertise are likely to be better positioned, while smaller manufacturers and retailers may shift to OEM or ODM production, reduce operations or exit the market, Kim said.
“For now, I would not say that market consolidation has already taken place,” he said. “The next one to two years will be the key period, as existing inventory is sold through and the new regulatory framework becomes fully established.”
Chinese suppliers face higher documentation demands
The compliance shift also affects suppliers outside South Korea.
The testing framework described by Kim covers 20 regulated harmful substances, including raw material components, carbonyl compounds, heavy metals, tobacco-specific nitrosamines and nicotine concentration. He expects regulatory testing to expand beyond e-liquids to include harmful substances in aerosol generated during product use.
That framework is changing what Korean manufacturers ask from overseas suppliers. Source verification, Certificates of Analysis, batch traceability and quality-control documentation are becoming more important, particularly for suppliers of nicotine, e-liquid ingredients, finished e-liquids and packaging.
Kim said supplying nicotine alone is no longer sufficient.
Packaging and labeling also need to be adapted to Korean rules, including warning labels, health warnings and tighter restrictions on fruit images, flavor-related descriptions and other consumer-attracting design elements. Overseas suppliers are increasingly being asked to provide Korea-specific packaging and labeling.
Overall, the Korean market is becoming less focused on price and more focused on compliance, Kim said. Suppliers able to verify raw-material origins, provide complete testing documents, maintain batch traceability and respond quickly to regulatory changes are likely to gain an advantage.
6-MN and DIY mixing emerge as next regulatory questions
The new rules have increased interest in products and practices outside the conventional nicotine e-liquid model.
Interest has clearly increased in nicotine-free products, nicotine analogues including 6-methyl nicotine, and DIY e-liquid mixing, sometimes referred to locally as “Liquid Kimjang” or 액상 김장, Kim said. But none of these has become the dominant market trend.
“At this stage, they should be viewed as temporary responses to a changing regulatory environment,” he said.
Among these alternatives, nicotine-free products are currently the most practical option. Some manufacturers have expanded nicotine-free e-liquids and disposable vaping products. But because they cannot fully satisfy existing nicotine users, they are unlikely to replace the overall nicotine market, Kim said.
The largest uncertainty is the future regulation of nicotine analogues, particularly 6-methyl nicotine, or 6-MN. The Korean government is reportedly aiming to complete its safety assessment of nicotine analogues by the end of 2026, and many companies believe the outcome will play a key role in shaping the future market, according to Kim.
If nicotine analogues are also brought under tobacco regulation, the market may move toward a model seen in parts of Europe, where nicotine shots are sold separately from flavored e-liquids. Some companies are already developing or preparing products based on that possibility, he said.
In the short term, existing inventory and nicotine analogue products will continue to influence the market. In the longer term, the direction of the market will largely depend on how nicotine analogues are regulated.
South Korea’s next phase watched beyond its borders
South Korea’s regulatory overhaul, covering licensing, product standards, taxation, retail controls and harmful-constituent management, will not only reshape its domestic vaping market but also serve as an important case study for global nicotine regulation.
The challenges emerging in South Korea — including nicotine analogues such as 6-methyl nicotine (6-MN), nicotine-free products, user-led DIY mixing and rapidly evolving product formats — may become regulatory questions that other markets will eventually need to address.
As nicotine products continue to evolve faster than existing regulatory frameworks, how South Korea implements the new rules, how the industry adapts and how regulators respond to emerging products could provide important insights for global vaping regulation.
2Firsts will continue to follow regulatory and market changes in South Korea’s nicotine and vaping sector.
Cover image generated by AI.
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