Germany Poised for Wave of Pod-system E-cigarettes

The latest data released by the German Tobacco Free Union (BfTG) reveals that disposable e-cigarettes now hold a 30% market share in Germany's e-cigarette market, a decrease of 10 percentage points compared to 2022. BfTG indicates that while disposable e-cigarettes still remain the dominant product type in Germany's e-cigarette market, their popularity is on the decline.

During the 2023 Dortmund Tobacco Exhibition held from September 14th to 16th, 2FIRSTS Observations found that over half of the brand exhibitors showcased their pod-system products.

Dortmund tobacco exhibition｜Source: 2FIRSTS

In fact, as early as May 2, 2023, 2FIRSTS reported that Germany could potentially become the first market in Europe to abandon disposable e-cigarettes. At that time, the decline of disposable e-cigarettes in the German market was only a prospective prediction, but today, this trend has become an undeniable fact.

Disposable Fallen out of Favor

At the 2023 Dortmund Tobacco Expo, 2FIRSTS engaged in discussions with multiple e-cigarette companies to understand the reasons behind the lack of acceptance of disposable e-cigarettes.

Overregulation is seen as one of the main reasons. At the exhibition site, several e-cigarette related businesses complained to 2FIRSTS, stating that Germany has extremely strict regulations on e-cigarettes, making it one of the most heavily regulated markets in Europe.

The booth manager of German distributor E-ZIGARETTEN-HANDEL.DE stated that the compliance procedures for the e-cigarette market in Germany are relatively complicated and require more time. Additionally, the packaging and compliance information of German e-cigarette products are strictly regulated, resulting in brands needing to invest more in this area.

The European General Manager of the major e-cigarette distributor and brand owner, ANDS, Mary Carmen, even stated that excessive government regulations could potentially squeeze compliant companies out of the market.

Mary Carmen, ANDS Managing Director, interviewed by 2firsts at InterTabac｜Source: 2FIRSTS

In addition to regulation, environmental pressure is also a key factor. The environmental concerns surrounding disposable e-cigarettes have long been a focus in the European market. Many environmentalists criticize the disposable nature of these products, pointing out that users need to completely dispose of them, including the difficult-to-recycle built-in batteries, once the e-liquid is depleted. This poses a significant burden on the environment.

As a result, disposable e-cigarettes face the risk of being banned in the European market. Germany is one of the countries with the strongest calls for prohibition. For instance, in early September, German Minister for the Environment, Steffi Lemke, urged the European Union to implement a complete ban on the sales of disposable e-cigarettes.

In addition, Europe will enforce restrictions on disposable e-cigarette batteries starting in 2026.

Faced with these pressures, e-cigarette companies have had to adopt a "passive" and cautious approach towards disposable e-cigarettes.

Pod-system Takes Center Stage Again

According to data released by Eurostat, the statistical office of the European Union, the import value of e-cigarettes in Germany in 2022 reached nearly €1 billion. Meanwhile, based on data from the General Administration of Customs of China, in July 2023, China's exports to Germany amounted to approximately $69.36 million (or around RMB 506 million), showing a month-on-month decrease of 20.95%, but a year-on-year increase of 138.75%.

China's vape export value and growth rate to Germany (US $) in July | Source: 2firsts (by Mincy)

The aforementioned data indicates that the e-cigarette market in Germany is substantial and has considerable potential. As a result, Germany is recognized as the third largest e-cigarette market in Europe.

E-cigarette companies naturally do not want to give up such a huge market. Therefore, when the development of disposable e-cigarettes is restricted, manufacturers immediately turn their hopes to the once neglected category in the market - pod systems.

Nick Schonfelder, sales manager at German e-cigarette distributor FEAL, informed 2FIRSTS that with the decline in the disposable e-cigarette market, the business of replaceable cartridge products has also seen an uptick. According to him, many companies have now shifted their primary focus to pod systems.

FEAL Sales Manager Nick Schonfelder interviewed by 2firsts｜Source: 2FIRSTS

At the tobacco exhibition in Dortmund, representatives of the well-known disposable e-cigarette brand Flonq revealed to 2FIRSTS that Flonq believes the German market has tremendous potential and plans to enter the market next year. It is worth noting that Flonq also showcased its pod system products at the event.

At the same time, 2FIRSTS discovered at the exhibition that over half of the exhibitors, including VOZOL and VOOPOO, showcased pod system products.

This situation is not only found in e-cigarette companies. Even the public relations manager of British American Tobacco (BAT) Germany, Daniel Terveen, confirmed to 2FIRSTS that pod-based products are the future trend in the German e-cigarette market.

Daniel Terveen (right), head of communications for British American Tobacco (BAT) Germany, interviewed by 2firsts at InterTabac｜Source: 2FIRSTS

Can Pod-system Replace Disposable?

Can the highly anticipated pod system rise to become the leading category in the German e-cigarette market?

Some argue that the pod system cannot replace disposable e-cigarettes. Yuoto's CEO, Cheng Guozuo, stated that the pod system lacks the rapid consumption attributes of fast-moving consumer goods (FMCG) and targets a different demographic than disposable e-cigarettes. Therefore, pod systems cannot be a substitute for disposable ones.

KIWI's latest pod-system series, the KIWI2. According to reports, the KIWI2 series are characterized by high quality and positioned in the high-end market, so the price is higher, reaching 99 euros per unit.｜Source: 2FIRSTS

The pod system, including the renowned Italian brand KIWI, is not being viewed optimistically for its development in the German market. The officials in charge of KIWI have expressed that the pod system market in Germany is performing averagely and facing challenges in its growth.

He listed four reasons, including excessive regulations in Germany, market monopolization by open systems, dominant presence of e-liquid manufacturers in the market, and each region having its own top tobacco product brands. This makes it difficult for other products to enter the market and participate in competition.

However, there are also people who hold the opposite viewpoint.

At the 2023 Dortmund Tobacco Expo, representatives from the Croatian brand Wiip expressed their intention to showcase their disposable vaping products in the hopes of attracting new customers. Despite the fact that the mentioned products have not been officially released, many attendees at the exhibition have already expressed interest in trying Wiip's disposable vaping products.

Other dealers also expressed that their stores have already had many consumers asking if there are any pod products, so once the relevant products are launched, there will be no shortage of purchasing power.

Meanwhile, some brand merchants also expressed to 2FIRSTS that the pod system has not come to a standstill, but rather, is continuously innovating and iterating to keep up with the market's development trends.

2FIRSTS has also gathered some information about the market in Germany.

At a tobacco specialty store, the owner informed 2FIRSTS that their best-selling product is the ELFA, a pod system from Heaven Gifts. The device is priced at 10 euros per unit, with a set of two pods also retailing for 10 euros. Due to its excellent value for money, this product has gained popularity among many customers.

Tobacco shop in Dortmund said their best-selling product was ELFBAR's pod-system product, ELFA.｜Source: 2FIRSTS

In addition, on the streets of Dortmund, 2FIRSTS also noticed numerous outdoor advertisements for HQD's pod-based product "CIRAK".

HQD outdoor advertising in Dortmund｜Source: 2FIRSTS

The discussion regarding whether the pod system can replace disposable products has been ongoing. Ultimately, the market will need to verify the final outcome.

Click on the link below to view the collection of reports on the 2023 Dortmund Tobacco Exhibition.

InterTabac 2023