Overregulation and strict environmental rules: does Germany’s vape market need pod-based products to

The German market for e-cigarettes is facing excessive regulation, and disposable e-cigarettes are under significant environmental pressure, leading to ongoing discussions about whether pod-based products can replace disposables. So, can pod-based e-cigarettes return to the center stage and support the largest category in the German e-cigarette market?

According to recent data released by the Tobacco Freedom Alliance (BfTG) in Dortmund, Germany, disposable e-cigarettes hold a 30% share of the German e-cigarette market, down 10 percentage points from 2022. BfTG stated that while disposable e-cigarettes remain the mainstream product type in the German market, their popularity is declining.

At the 2023 Dortmund Tobacco Exhibition held from September 14 to 16, it was observed that more than half of the brands showcased pod-based products.

Scene outside the Dortmund Tobacco Exhibition | Source: Two Supremes

In fact, as early as May 2023, Two Supremes reported that Germany could become the first European market to abandon disposable e-cigarettes. At that time, the decline of disposable e-cigarettes in the German market was merely a forward-looking prediction, but this trend has now become an undeniable fact.

Disposable e-cigarettes are becoming 'unpopular'

At the 2023 Dortmund Tobacco Exhibition, Two Supremes communicated with several e-cigarette companies to understand the reasons for the 'unpopularity' of disposable e-cigarettes.

Excessive regulation is considered one of the main reasons. At the exhibition, many e-cigarette-related companies complained to Two Supremes that Germany has very strict regulations on e-cigarettes, making it one of the most strictly regulated markets in Europe.

The booth manager of German distributor E-ZIGARETTEN-HANDEL.DE stated that the compliance procedures in the German e-cigarette market are relatively cumbersome and require more time. Additionally, the packaging and compliance information for German e-cigarette products are subject to extremely strict regulations, which means brands need to invest more costs in this area.

Mary Carmen, the European General Manager of large e-cigarette distributor and brand ANDS, even stated that excessive government regulation could lead to compliant companies being 'squeezed out' of the market.

Mary Carmen, European General Manager of ANDS, interviewed by Two Supremes at the Dortmund Exhibition | Source: Two Supremes

In addition to regulation, environmental pressure is also a key reason. The environmental issues surrounding disposable e-cigarettes have been a major concern in the European market. Many environmentalists criticize disposable e-cigarette products, pointing out that once the e-liquid is exhausted, users must completely discard these products, including built-in batteries that are difficult to recycle, which puts immense pressure on the environment.

As a result, disposable e-cigarettes face the risk of being banned in the European market, with Germany being one of the countries with the highest calls for a ban. For example, in early September, German Environment Minister Steffi Lemke called for a comprehensive ban on the sale of disposable e-cigarettes in the EU.

Furthermore, Europe will implement restrictions on disposable e-cigarette batteries in 2026.

Under these pressures, e-cigarette companies have had to adopt a 'passive' and cautious attitude towards disposable e-cigarettes.

Pod-based products return to the center stage

According to data released by Eurostat, Germany imported e-cigarettes worth nearly 1 billion euros in 2022. Meanwhile, according to data from the General Administration of Customs of China, in July 2023, China's exports to Germany amounted to approximately 69.36 million USD (about 506 million RMB), a month-on-month decrease of 20.95%, but a year-on-year increase of 138.75%.

July exports of e-cigarettes from China to Germany and growth rate (USD) | Source: Two Supremes (Chart by Jiang Mingxi)

The above data indicates that the German e-cigarette market is vast and has considerable potential. Therefore, Germany is recognized as the third-largest e-cigarette market in Europe.

E-cigarette companies naturally do not want to give up such a large market. Therefore, when the development of disposable e-cigarettes is restricted, manufacturers immediately turn their hopes to the category of pod-based e-cigarettes, which had previously been 'neglected' by the market.

Nick Schonfelder, Sales Manager of German e-cigarette distributor FEAL, told Two Supremes that as the market for disposable e-cigarettes declines, the business for pod-based products is also on the rise. He revealed that many companies have now shifted their main business to pod-based e-cigarettes.

Nick Schonfelder, Sales Manager of FEAL, interviewed by Two Supremes at the Dortmund Tobacco Exhibition | Source: Two Supremes

At the Dortmund Tobacco Exhibition, a representative from the well-known disposable e-cigarette brand Flonq revealed to Two Supremes that Flonq believes the German market has huge potential and plans to enter this market next year. Notably, Flonq also showcased pod-based e-cigarette products at the exhibition.

Meanwhile, Two Supremes discovered at the exhibition that more than half of the exhibitors, including VOZOL and VOOPOO, brought pod-based e-cigarette products to showcase.

This situation is not only seen among e-cigarette companies. Even Daniel Terveen, the PR manager of international tobacco giant British American Tobacco (BAT) in Germany, stated to Two Supremes that pod-based products are the future development trend of the German e-cigarette market.

Daniel Terveen, PR manager of British American Tobacco (BAT) in Germany (right), interviewed by Two Supremes at the Dortmund Exhibition | Source: Two Supremes

Can pod-based products replace disposables?

Can the highly anticipated pod-based e-cigarettes support the largest category in the German e-cigarette market?

Some believe that pod-based e-cigarettes cannot replace disposable e-cigarettes. Cheng Guozuo, CEO of e-cigarette company Yuoto, stated that pod-based e-cigarettes do not possess the fast-moving consumer goods attributes and target a different demographic than disposable e-cigarettes, thus pod-based products cannot replace disposables.

Those skeptical about the development of pod-based e-cigarettes in the German market also include the well-known Italian brand KIWI. A representative from KIWI stated that the performance of pod-based e-cigarettes in Germany is mediocre and development is challenging.

The image shows KIWI's latest pod-based product series—KIWI2. It is reported that the KIWI2 series e-cigarettes are characterized by high quality and are positioned for high-end consumers, thus priced higher at 99 euros each. | Source: Two Supremes

He listed four reasons, including excessive regulation in Germany, the market being monopolized by open-system e-cigarettes, strong positions of e-liquid manufacturers in the market, and the presence of top tobacco brands in various regions. This makes it difficult for other products to enter the market and compete.

However, there are also opposing views.

At the 2023 Dortmund Tobacco Exhibition, a representative from the Croatian brand Wiip stated that they brought pod-based products to the exhibition in hopes of finding new customers. Although the related products have not yet officially launched, many users on-site expressed willingness to use Wiip's pod-based products.

Additionally, some distributors mentioned that many consumers in their stores have already inquired about the availability of pod-based products, so once related products are launched, there will be no lack of purchasing power.

Meanwhile, some brand owners also told Two Supremes that pod-based e-cigarettes are not stagnant but are continuously innovating and iterating to keep up with market trends.

Two Supremes also learned some information about the German market.

In a tobacco specialty store, the owner told Two Supremes that their best-selling product is the IQOS pod-based product ELFA, which is priced at 10 euros each, and a set of pods costs a total of 10 euros for two. Due to its high cost-performance ratio, this product is favored by many customers.

Two Supremes conducted research in a tobacco shop in Dortmund, where the store manager stated that their best-selling product is the IQOS pod-based product ELFA. | Source: Two Supremes

Moreover, on the streets of Dortmund, Two Supremes also noticed many outdoor advertisements for HQD's pod-based product 'CIRAK'.

HQD's outdoor advertisement in Dortmund | Source: Two Supremes

The discussion about whether pod-based e-cigarettes can replace disposable products continues. The final outcome needs to be verified by the market.