Global vaping market shifts toward pod-based products; disposables may lose scale over the next thre

In recent years, the global electronic vaping industry has been influenced by the "trend" of disposable products, but this craze began to gradually fade this year. Regulatory agencies in the United States and Europe have targeted disposable products, accusing them of various issues such as environmental pollution and evading regulations, while public groups and NGOs have increasingly voiced their opposition to disposables.

Under the influence of policies and public opinion, several leading disposable brands are now trending towards transitioning to pod-based products. For example, Elf Bar has launched pod-based products in the markets of Germany, Italy, and Spain. Brands like VUSE have also publicly stated to the media that pod-based products are the future trend. A notable dynamic is that at the tobacco exhibition in Dortmund, Germany, in September, more than half of the electronic vaping exhibitors showcased pod-based products, and many participating brands introduced new pod-based offerings.

After the pandemic of disposable products, the negative impacts have continued to accumulate, clearly exceeding the expectations of regulatory authorities. The crackdown on disposables has long begun. In this adverse environment, some brand owners and distributors believe that shifting to pod-based products, which have higher profit margins and lower compliance risks, is more beneficial for long-term development.

Trends indicate that users of disposable products are also transitioning to more suitable pod-based products for daily use. Under multiple influences, the disposable market is significantly transitioning to pod-based products.

Tightening Regulations: EU and US Crack Down on Disposables

In June of this year, the US FDA issued warning letters to 189 retailers, demanding they stop selling unauthorized tobacco products, especially ELFBAR and Esco Bars. Both brands named by the FDA are popular disposable brands in the US market.

The early pod-based era also faced various issues similar to the current disposable industry. For instance, brands like JUUL marketed to minors and attracted them with fruity flavors. In 2020, the FDA required all electronic vaping products launched before August 8, 2016, to submit PMTA applications, or they would be removed from the US market. With strong intervention from regulatory authorities, the pod-based market has now moved past the "wild" development stage, with a smaller but orderly market size.

The industry generally believes that disposable products emerged due to regulatory loopholes and market windows during the FDA's full regulation of pod-based products.

While pod-based products have developed in an orderly manner, disposable products have re-entered a phase of wild development, causing various issues globally.

The most concerning issue with disposable products is battery waste pollution. Disposable products use pods with integrated batteries, leading to the disposal of batteries along with the depleted e-liquid. A report cited by the BBC indicates that up to 1.3 million disposable e-cigarettes are thrown away in the UK each week, containing 10 tons of lithium, equivalent to the batteries in 1,200 electric vehicles.

As a result, regulatory authorities in various countries are now focusing on battery waste in their regulation of e-cigarettes. For example, the New Zealand government has mandated that all e-cigarette devices sold in New Zealand must be equipped with removable or replaceable batteries starting from August this year. From the EU's overall policy trend, equipping electronic products with removable and replaceable batteries is also an important policy goal for the next 3-5 years.

In June of this year, the EU Parliament passed new battery management rules, set to be implemented by 2027. The new regulations require that by then, small electronic devices sold in the EU market, including mobile phones, must adopt designs with consumer-removable and replaceable batteries. Disposable e-cigarettes have also come under scrutiny from regulatory agencies in several EU countries. In September, the French Prime Minister announced a plan to ban the sale of disposable products; subsequently, official departments in the UK and Germany revealed intentions to promote a ban on disposable products.

Similarly, in the US, as of now, products that can pass PMTA are mostly pod-based products with reusable battery rods, such as NJOY ACE and LOGIC, which are more environmentally friendly. Additionally, the FDA has recently begun to target key disposable manufacturers. Like the EU, the goal of regulatory authorities is to gradually phase out disposable products with non-removable batteries from the market.

It is foreseeable that once regulatory power fully intervenes in the disposable market, the future of this market will also become orderly. The one-sided increase in disposable products will no longer exist, and the market size will shrink.

Disposable Products Deeply Trapped in Overfilling and Low-Quality Competition

The EU and the UK have stipulated that the liquid capacity of disposable products sold in the market cannot exceed 2ml—this capacity often fails to meet consumer demands for product cost-effectiveness, leading many brands to adopt overfilling methods to enhance product competitiveness. Earlier this year, the Elf Bar and Lost Mary nicotine overfilling incident, which drew significant attention from European regulatory authorities and mainstream media, was caused by disposable manufacturers violating the 2ml limit and illegally increasing the liquid capacity.

After this incident, several disposable brands involved faced removal from local chain supermarkets. Such situations reflect that after consumers develop usage habits, they require products with longer usage cycles, while compliant disposable products are limited by liquid capacity. Therefore, some brand owners took risks by overfilling disposable products.

Moreover, due to the disposable industry being trapped in a cycle of homogenized competition, brands often engage in price wars, severely compressing profit margins. This has resulted in disposable products on the market having profit margins of no more than 30%, and in some cases, even single digits. In contrast, pod-based products generally achieve profit margins of over 30%. The iteration speed of disposable products is often very fast, driven by low profits, as manufacturers lack the motivation for breakthrough innovations, with most brands competing for consumer attention through rapid changes in product appearance and design.

However, the source of healthy development in the electronic vaping industry comes from continuous technological innovation, not low-price competition. Looking back at the history of global smartphones and smart computers transformed by Apple, it becomes evident that the true vitality and future of the industry come from brands that continuously break through and innovate.

Therefore, European distributors share the consensus that shifting from disposable products to selling more pod-based products can make their business more stable, without worrying about sudden regulatory crackdowns on their products. Additionally, compared to disposable products, pod-based products clearly have a larger profit margin.

Looking at the layout trajectory of global tobacco companies in electronic vaping products, they also prioritize the promotion of pod-based products in terminal channels to build a better commercial ecosystem.

Industry Turning Point: Multiple Parties are Transitioning from Disposable to Pod-Based Products

Recent market trends show that a large number of consumers of disposable products, as well as distributors and brand owners, are transitioning to pod-based products.

Some European distributors have indicated that due to the increasing environmental awareness among people and the frequent disposal of disposable e-cigarettes, pod-based products have become the choice for consumers again. Additionally, due to the escalating rumors of disposable bans, some distributors have directly abandoned disposable products; Superdrug has confirmed that it will no longer sell disposable e-cigarettes in all its stores in the UK and Ireland. German distributor FEAL has also stated that as the disposable e-cigarette market declines, the business for pod-based products is rising, with many companies already shifting their main business to pod-based e-cigarettes.

According to data released by the German Tobacco Freedom Alliance, the share of disposable products in the electronic vaping market has dropped from 40% to 30% in the past year.

It is evident that several leading disposable brands are actively laying out new pod-based products, such as ELFBAR. Media reports indicate that Elf Bar's expansion into the pod-based field is aimed at enriching its product portfolio and aligning with the latest market trends. At the German exhibition in September, brands like OS Vape, Hexa, Aroma King, Pod Salt, and Wiip showcased pod-based products.

Unlike the low-price competition in the disposable sector, the pod-based product field has already established high technical entry barriers. In recent years, to meet the FDA's harm reduction requirements for electronic vaping products, brands and manufacturers represented by British American Tobacco have invested significant resources in research and development of pod-based products.

After being trapped in multiple dilemmas such as policies, public opinion, and low-price competition, disposable products are about to face a major reshuffle period. Pod-based products, which have long entered the path of compliant development, will usher in another rapid growth phase.