Ukrainian Researchers Estimate E-Cigarette Black Market at 90%, Warn of About $180 Million Budget Hit in 2025

Oct.16.2025
Ukrainian Researchers Estimate E-Cigarette Black Market at 90%, Warn of About $180 Million Budget Hit in 2025
Ukrainian researchers estimate that the illicit e-cigarette market makes up about 93% of total sales. Based on the National Bank of Ukraine’s exchange rate, if the black market remains at its current size, Ukraine’s state and local budgets could lose roughly $180 million in revenue in 2025.

Key Points at a Glance
 

  • Fiscal impact: If the black market persists at its current scale, Ukraine’s consolidated budgets could lose about UAH 7.5 billion (~US$180 million) in 2025, including roughly UAH 5.0 billion in excise tax, UAH 2.0 billion in VAT, and UAH 0.5 billion in local retail excise.
  • Black-market share & makeup: The illicit e-cigarette market accounts for about 93% of total sales; sources are roughly 40% smuggled e-liquids (including pre-filled devices) + 60% domestically produced counterfeits/“DIY blends.”
  • Enforcement roadmap & international comparison: Calls for greater resourcing and coordinated enforcement by customs, border guards, the Economic Security Bureau, tax authorities, and local agencies. In the FY2026 U.S. budget, US$200 million is earmarked for combating illicit e-cigarettes—suggesting increased fiscal investment is a common policy path.

 


 

2Firsts, October 16, 2025 — According to RBC-Ukraine (РБК-Україна), Mykola Pasichnyi, Professor in the Department of Finance at the Kyiv National University of Trade and Economics and an expert at the Growford Institute, stated on the “Espreso TV” program that the continuing expansion of the illicit e-cigarette market could reduce Ukraine’s combined state and local budget revenues by about UAH 7.5 billion (~US$180 million) in 2025. The projected shortfall includes approximately UAH 5.0 billion (~US$120 million) in excise tax, UAH 2.0 billion (~US$48 million) in VAT, and UAH 0.5 billion (~US$12 million) in local retail excise.

 

Pasichnyi said Ukraine’s e-cigarette market is “almost entirely in the gray zone.” Data from the Growford Institute indicate the black market accounts for about 93% of the total market. Roughly 40% of e-liquid is smuggled into Ukraine (either in various container sizes or pre-filled in devices), while the remaining 60% consists of counterfeit products manufactured domestically and sold either as “DIY blends” (e-liquid mixed through informal channels) or as finished goods.

 

As an example, he noted that in July 2025, Ukrainian law enforcement uncovered an illicit e-cigarette case with seized goods valued at around UAH 100 million (~US$2.4 million). Drawing on practices in advanced economies, Pasichnyi recommended that enforcement be underpinned by increased resources and tighter coordination among customs, border guards, the Economic Security Bureau, tax authorities, and local bodies.

 

The report also cites his observation that the United States, in its FY2026 budget, for the first time allocated US$200 million to combat illicit e-cigarettes—suggesting that ramping up fiscal investment is one of the common approaches countries take to govern such black markets.

 

 

Cover image credit: RBC

We welcome news tips, article submissions, interview requests, or comments on this piece.

Please contact us at info@2firsts.com, or reach out to Alan Zhao, CEO of 2Firsts, on LinkedIn


Notice

1.  This article is intended solely for professional research purposes related to industry, technology, and policy. Any references to brands or products are made purely for objective description and do not constitute any form of endorsement, recommendation, or promotion by 2Firsts.

2.  The use of nicotine-containing products — including, but not limited to, cigarettes, e-cigarettes, nicotine pouchand heated tobacco products — carries significant health risks. Users are responsible for complying with all applicable laws and regulations in their respective jurisdictions.

3.  This article is not intended to serve as the basis for any investment decisions or financial advice. 2Firsts assumes no direct or indirect liability for any inaccuracies or errors in the content.

4.  Access to this article is strictly prohibited for individuals below the legal age in their jurisdiction.

 

Copyright

 

This article is either an original work created by 2Firsts or a reproduction from third-party sources with proper attribution. All copyrights and usage rights belong to 2Firsts or the original content provider. Unauthorized reproduction, distribution, or any other form of unauthorized use by any individual or organization is strictly prohibited. Violators will be held legally accountable.

For copyright-related inquiries, please contact: info@2firsts.com

 

AI Assistance Disclaimer

 

This article may have been enhanced using AI tools to improve translation and editorial efficiency. However, due to technical limitations, inaccuracies may occur. Readers are encouraged to refer to the cited sources for the most accurate information.

We welcome any corrections or feedback. Please contact us at: info@2firsts.com

Michael Olise’s World Cup Locker-Room Photo Puts Nicotine Pouches in the Sports Business Spotlight
Michael Olise’s World Cup Locker-Room Photo Puts Nicotine Pouches in the Sports Business Spotlight
Several European sports outlets have reported on a suspected nicotine pouch seen in French footballer Michael Olise’s locker photo, bringing football’s long-running “snus” culture back into public view and highlighting brand visibility, product classification and public-health debate around nicotine pouches in sports settings.
News
Jun.25 by 2Firsts Perspectives
BAT Estimates U.S. Unauthorized Vape Market at $9.4 Billion, Plans New Vuse and Velo Launches After FDA Enforcement Shift
BAT Estimates U.S. Unauthorized Vape Market at $9.4 Billion, Plans New Vuse and Velo Launches After FDA Enforcement Shift
British American Tobacco (BAT) CEO Tadeu Marroco said the U.S. unauthorized vape market is worth about £7 billion, or US$9.43 billion. Following a shift in FDA enforcement policy, BAT plans to launch flavored Vuse products in the third quarter and an updated Velo pouch in August or September.
Jun.15
Australian State Targets Illegal Tobacco Retailers With Tougher Closure Powers
Australian State Targets Illegal Tobacco Retailers With Tougher Closure Powers
According to Reuters, Australia’s state of Victoria introduced legislation to give police and the state tobacco licensing regulator stronger powers to shut businesses selling illegal tobacco, with non-compliant operators facing fines of more than A$2.4 million and up to 20 years in prison.
Jun.05
Australia Quantifies Black Market for First Time, Illicit Nicotine Products Account for About 80% of Consumption
Australia Quantifies Black Market for First Time, Illicit Nicotine Products Account for About 80% of Consumption
The Australian Bureau of Statistics (ABS) has released its first estimate of the illicit nicotine market, finding that about 80% of cigarettes, vapes and other nicotine products consumed in 2025 came from illegal sources, reigniting debate over tobacco taxation and enforcement policies.
Jun.03
Malaysian Court Rules Liquid Nicotine Exemption Irrational, Renewing Vape Regulation Debate
Malaysian Court Rules Liquid Nicotine Exemption Irrational, Renewing Vape Regulation Debate
Malaysia’s High Court ruled that the government’s earlier decision to remove liquid nicotine from the country’s Poisons List was “irrational,” reigniting debate over vape regulation, illicit trade, and youth protection.
Regulations
May.18
Nature Health Comment Urges Wider Role for Smoke-Free Nicotine Products in Tobacco Control
Nature Health Comment Urges Wider Role for Smoke-Free Nicotine Products in Tobacco Control
Ahead of World No Tobacco Day, a Nature Health Comment by Robert Beaglehole, Ruth Bonita and Tikki Pang argues that regulated smoke-free nicotine products could help accelerate the global decline in smoking. The authors propose a “smoke-free 2040” goal and call for risk-proportionate regulation distinguishing cigarettes from lower-risk nicotine alternatives.
News
May.20